AgroPages-Cheminova’s first-half sales increase 47%-Agricultural news

Favourable first-quarter market conditions for Cheminova continued in the second quarter, leading to an impressive 47% increase in sales to DKK 3,070 million ($607 million) in the first half of 2008. Sales had increased 32.5% in the first quarter. Strong demand for the company’s largest-selling product, the herbicide, glyphosate, and the acquisition of a 50% stake in the German agrochemical group, Stähler (Stade), led to the growth. The company says that the underlying growth excluding Stähler was more than 40 per cent. Agrochemicals account for about 90% of Cheminova’s sales.

The revenue growth is “in line” with Cheminova’s June forecast, the company says. Earnings before interest, tax, depreciation and amortisation (EBITDA) shot up by 188.3%, while EBIT grew five-fold to DKK 373 million ($74 million). The EBIT margin increased three-fold to 12%. The company obtained higher average prices during the period, which “more than compensated for increasing raw material and energy costs”.

Cheminovas first-half results (DKK million)
	2007 ($ million)	% change	2008 ($ million)
Sales	2,089 (413)	47.0	3,070 (607)
EBITDA¹	162 (32)	> 100	467 (92)
EBIT²	74 (15)	> 100	373 (74)
¹ earnings before interest, tax, depreciation and amortisation; ² earnings before interest and tax.

Cheminova says that it experienced growth in all important markets and for largely all products. Sales in Europe increased by 73% to DKK 1,094 million ($216 million). The growth is attributable to the stake in Stähler, but the company says that all product areas have seen considerable growth.

Sales in the company’s ANZAC region (Australia, New Zealand, US and Canada) increased by 54% to DKK 714 million ($141 million). Australian sales more than doubled relative to the same period last year when the country was affected by drought.

Latin American sales increased by 53% to DKK 506 million ($100 million). Cheminova’s subsidiaries in Mexico, Colombia, Brazil and Argentina recorded “satisfactory growth” in revenue and earnings. In other parts of the world, it saw “strong growth” in the CIS countries.

Cheminova says that introduction of Ishihara Sangyo Kaisha’s fungicide, fluazinam, in the UK market, and BASF’s triazole fungicide, epoxiconazole, in Denmark, have been “satisfactory”. It says that the first generic registration for the herbicide, sulcotrione, has been obtained in Europe.

The company says that market data indicate a general growth of more than 20% in the global agrochemical market. It sees the increasing demand for agricultural products resulting from the increasing standards of living in countries such as China and India as the primary reason for the growth. It cites the increasing demand for ethanol for fuel based on maize and sugar cane and relatively favourable climatic conditions in most major markets as other important factors for the demand for plant protection products.

Cheminova retains its outlook for 2008 for sales at DKK 5,500 million ($1,087 million) and a profit before tax at DKK 450-500 million ($89-99 million). It cites the glyphosate market price and the availability and prices of key raw materials as “significant uncertainty factors”. It acquired Dow AgroSciences’ 50% share in the companies’ joint venture, Pytech Chemicals, in July. Pytech will be fully consolidated into Cheminova accounts from the second half of 2008 and is expected to have only a minor positive impact on the 2008 results.

The company expects to meet its previously announced targets for 2010 of revenues of DKK 5,500 million and an EBIT margin of 10% in 2009. It expects the pro rata consolidation of Stähler to help it obtain revenues of just under DKK 5,900 million ($1,166 million) in 2009 with an EBIT margin of around 10%.