Isagro sales slipped 19% in Q3

Date:11-09-2012

In the first nine months of 2012, the consolidated turnover of Isagro Group amounted to €101.6 million, down of €3.4 million (-3.2%) versus €105.0 million of the same period of last year. 

This decrease of consolidated turnover took place in the 3rd quarter – a period historically not significant due to business seasonality and which has not benefited yet of the incremental sales from new registrations of proprietary products, in particular in Brazil and United States, expected in the 4th quarter of the current year – and is mostly the result of the lower sales of copper-base fungicides in particular in Italy. The dry weather, in fact, led to a drop in sales volumes to local distributors, worsened by a parallel reduction in orders of technical products by industrial clients.
 
EBITDA before non-recurring net incomes in the first nine months of 2012 amounted to € 6.5 million, up by € 0.5 million (+7.3%) versus € 6.0 million in the same period of last year. This increase – although in presence of a small decrease in revenues versus the first nine months of 2011 – has been possible thanks to a better sales mix (in terms both of areas and products), reflected also in the rise, from 84.8% to 86.3%, of the share of proprietary products on total agropharma sales. Including, then, the non-recurring net incomes at gross operating margin level – amounting to € 1.9 million in the first nine months of this year versus € 2.5 million in 2011 – EBITDA in the first nine months of 2012 was € 8.4 million, thus marking a small decline (€ -0.1 million or -1.3%) versus € 8.5 million in the same period of 2011.
 
EBIT before non-recurring net incomes in the first nine months of 2012 was negative for € 1.1 million, marking a small fall from the loss of € 0.9 million in the same period of 2011. Considering, then, the non-recurring net incomes –which in 2011 included also the reappraisal of the book value of two proprietary molecules – EBIT as of September 30th, 2012 amounted to € 0.7 million versus € 4.8 million in the first nine months of 2011.
 
In consideration of above mentioned events, Result before taxes, if excluding the non-recurrent net incomes, was negative for € 4.3 million, marking an improvement of €4.0 million versus the € 8.3 million loss as of September 30th, 2011 thanks to an important improvement in the results from the hedging activity of forex and copper price. Including such non-recurring net incomes, Result before taxes was negative for € 2.5 million, this figure being basically in line with the € 2.6 million loss recorded as of September 30th, 2011.
 
Finally, Net result at consolidated level was negative for € 2.9 million versus a net income of € 9.7 million as of September 30th, 2011 – which included, however, on top of the already mentioned non-recurring net incomes at operating result level, also a net gain of € 8.2 million linked to the extraordinary disposal of distribution activities in Italy, Brazil and Argentina. 

Isagro sales results (€ 000)
Q3 ended Sep. 30th	Q3 2012	Q3 2011	change%	9 months 2012	9 months 2011	change%
Sales	22,252	27,483	-19.0	101,605	104,954	-3.2
EBITDA*	892	1,014	-12.0	8,434	8,543	-1.3
EBIT** (loss)	(1,799)	(1,446)	n/a	712	4,751	-85.0
* earnings before interest and tax depreciation and amortisation ** earnings before interest, tax

Outlook

Isagro confirms to expect an increase in revenues the end of the year, reaching a level around 150 million Euro, thanks to the strong growth of sales from new registrations in the 4th Quarter on US and Brazil markets. Development of a new fungicide in alliance with FMC Corporation and of a new fumigant started will also be the main factors which contribute to sales growth.
 
The above mentioned growth of revenues will be lower than the one estimated at the beginning of the year, due mostly to the extraordinary diffusion and  intensity of drought which affected important markets and which leads to lower consumption/sales of fungicides in the current year, higher stocks at a distribution level at campaign-end and effects also on 2013.