Makhteshim Agan agchem sales up 2% in Q2 2013

ChemChina subsidiary Makhteshim-Agan Industries (MAI) posted a 1.9% increase in agrochemical sales to $748.2 million in the second quarter ended June 30, 2013. The total sales grew by 2.5% to $803.3 million in this quarter. For the first half year of 2013, the agrochemical sales rose by 4.6% to $ 1,584.7 million, and the total sales boosted by 4.8% to $1,688.6 million.The second quarter and first half year of 2013 posted an increase in sales that stemmed primarily from an increase in quantities sold in most regions of operation despite the decrease in sales in North America, which resulted from severe weather conditions and accumulated stocks in the marketing pipelines.It is noted that the effective level of exchange rates the Reporting Period was lower than the level at which the Company operated in the corresponding period last year and accordingly, sales in the second quarter reflect a negative effect of the exchange rates in an amount of $ 9.5 million.

Makhteshim Agan's sales results ($ million)
Q2 ended Jun. 30	Q2 2013	Q2 2012	%change	Six-month 2013	Six-month 2012	% change
Sales	803.3	783.4	+2.5%	1,688.6	1,611.5	+4.8%
-Agchem	748.2	734.5	+1.9%	1,584.7	1,514.5	+4.6%
Gross profit	253.4	254.6	-0.5%	548.2	541.6	+1.2%
Operating income	93.3	100.8	-7.4%	224.4	225.8	-0.6%
EBITDA1	132.6	136.1	-2.6%	301.0	299.3	+0.6%
EBIT2	93.3	100.8	-7.4%	224.4	225.8	-0.6%
1 earnings before interest, tax, depreciation and amortization; 2 earnings before interest and tax.

Second-quarter gross profit slightly dropped by 0.5% to $ 253.4 million. Gross profit for the six-month of 2013 advanced by 1.2% to $ 548.2 million. The change in the gross profit rate in the quarter and in the Reporting Period stemmed mainly from a rise in the prices of raw materials and the lower effective exchange rate level than that at which the Company operated in the corresponding period but which was partially offset by the Company's better product mix.

EBITDA was down by 2.6% to $132.6 million in the second quarter of 2013, while six months EBITDA slightly rose by 0.6% to $301.0 million. Second quarter EBIT declined by 7.4% to $93.3million, and half year EBIT decreased by 0.6% to $ 224.4million. 

 Sales by region

Makhteshim Agan's sales results by regions ($ million)
Q2 ended Jun. 30	Q2 2013	Q2 2012	%change	Six-month 2013	Six-month 2012	% change
European	340.6	320.6	+6.2%	776.6	744.2	+4.4%
Latin America	139.8	137.3	+1.8%	268.2	244.7	+9.6%
North America	150.8	169.6	-11.1%	296.6	301.5	-1.6%
Asia Pacific and Africa	144.2	127.6	+13.0%	292.3	268.8	+8.7%
Israel	27.9	28.3	-1.5%	54.9	52.3	+5.2%
Total	803.3	783.4	+2.5%	1,688.6	1,611,5	+4.8%

Europe was the company’s largest region for business, accounting for 42.4% of consolidated sales. Second quarter sales were up by 6.2% to $340.6 million.The increase was driven by quantities sold and from raising the selling prices despite the severe weather conditions.Half year sales in Europe rose by 4.4% to $776.6 million. The increase was due to an increase in quantities sold and raising the selling prices. It is noted that the effective exchange rate level in the Reporting Period was lower than the level at which the Company operated in the corresponding period last year.

Breakdown of quarterly sales by percentage:

North America was the second-largest region, contributing 18.8% of consolidated sales. Second quarter sales were down by 11.1% to $150.8 million.The fall stemmed primarily from a decrease in quantities sold owing to the severe weather conditions.Six months sales dropped by 1.6% to $296.6 million.The change was due to a decrease in quantities sold owing to the severe weather conditions, which was partially compensated by higher selling prices.

Latin America accounting for 17.4% of sales ,which rose by 1.8% to $139.8 million.Half year sales were up by 9.6% to $268.2 million.The rise resulted from an increase in quantities sold, together with higher selling prices.

Asia Pacific and Africa posted the highest growth, with sales rising by 13.0%to $144.2 million in this quarter,making up 18.0% of total sales. Half year sales were up by 8.7% to $292.3 million.The increase in the quarter and in the half year stemmed mainly from an increase in quantities sold, which was partially offset by lower selling prices and a weakening of the various currencies in the region.

second quarter sales in Israel were down by 1.5% to $27.9 million, accounting for 3.5% of total sales. Six months sales rose by 5.2% to $54.9 million.