Makhteshim Agan Announces Very Strong Financial Results for Q1 2012
TEL-AVIV, Israel, May 13, 2012 /PRNewswire/ --
Highest Ever Sales and Improved Profitability Driven by Successful Execution of Company's Strategic Plan and Stable Weather Conditions
12.3% Growth in Gross Profit Leading to Record EBITDA for the Quarter
Continued Business Momentum in Europe and APAC & Africa Regions
The Makhteshim Agan Group ("MAI" or the "Company"), the world leader in branded off-patent crop protection solutions, today reported financial results for the first quarter ended March 31, 2012.
FINANCIAL HIGHLIGHTS
Below are key financial metrics for Q1 2012 and the corresponding period of 2011 (in USD millions):
Q1 2012 Q1 2011 Change
Sales 828.0 780.5 6.1%
Gross profit 286.9 255.5 12.3%
Gross margin 34.6% 32.7%
Operating profit 125.0 112.1 11.5%
Profit before tax 101.6 88.0 15.5%
Tax on income (12.2) 3.9
Net income 89.3 91.7 (2.7%)
EBITDA 163.2 143.2 13.9%
Commenting on the results, Mr. Yang Xingqiang, Makhteshim Agan's Chairman of the Board, said: "our strong business performance during the first quarter, including our record sales, gross profit and EBIDTA, stems from our focused pursuit of our strategic direction. We are also working intensively to realize the joint potential of MAI and ChemChina following the completion of our merger, including investigating business opportunities in China that will enable us to strengthen our presence in China and the Pacific Asian region and foster continued growth and improved profitability over the long term."
Mr. Erez Vigodman, President and CEO of Makhteshim Agan, commented: "Makhteshim-Agan's first quarter presents a good start to 2012, posting record financial results in most parameters.
These results are yet another reflection of the transformation our business and operations have been undergoing since 2010. Positive environment in global agriculture industry in general, and in the agro-chemical industry in particular, were also influential.
We remain committed to advancing our short and long term agenda as we evolve our business to provide simple, effective, reliable solutions to farmers. We do that by implementing significant improvement measures that effect our operations and global infrastructure. At the same time, we are investing significant resources in our future growth, primarily in the integration of Makhteshim Agan and the agro-chemical activities of ChemChina, as well as in other major strategic initiatives."
SALES
First quarter 2012 sales were $828.0 million, compared with $780.5 million in the corresponding period of 2011, an increase of 6.1%. The increase stemmed primarily from an improved mix of products and an increase in volumes sold. In addition, a rise in the price of oil and raw materials since 2011triggered a slight increase in selling prices in the crop protection sector which allowed MAI to also raise its prices.
Below are revenues for the Q1 2012 by geographic region:
Breakdown of
Sales
(Millions of $US)
Q1 2012 Q1 2011 % Change
Europe 423.5 388.9 8.9%
Latin America 107.4 113.5 (5.4%)
North America 131.9 126.9 3.9%
Asia Pacific &
Africa 141.2 126.7 11.4%
Israel 24.0 24.5 (1.9%)
On a geographic basis, the strongest sales growth was delivered bythe Company's Asia Pacific & Africa region, which contributed $141.2 million in the first quarter year of 2012, an 11.4% increase from $126.7 million for the first quarter of 2011. This improvement resulted from an increase in quantities sold in Asia and from the positive impact of changes in exchange rates which were partially offset by the Company's hedging transactions.
European sales for the first quarter of 2012 were $423.5 million compared with $388.9 million in the corresponding period of the previous year, an increase of 8.9%. The growth stemmed mainly from increased quantities sold and ability to compensate for some of the increase in raw material costs through moderate price increase. This was countered by the negative effect of changes in exchange rates that were offset, somewhat, by the Company's hedging transactions.
North American sales for Q1 2012 amounted to $131.9 million compared to $126.9 million for the comparable period in 2011, an increase of 3.9%. Sales were characterized by an increase in volumes.
Sales in Latin America for first quarter of 2012 were $107.4 million compared to $113.5 million for the same quarter last year, a reduction of 5.4%. The slight decrease in sales stemmed from lower quantities sold as a result of draught conditions in Argentina.
GROSS PROFIT
Gross profit for the quarter totaled $286.9 million compared to $255.5 million for the same period in 2011, an increase of 12.3%. Gross margin for the quarter was 34.6%, compared with 32.7% for the same period in 2011. The significant improvement in gross profit and the gross margin during the first quarter of 2012 resulted primarily from an improved product mix aided by an increase in sales volume,the positive effect of efficiency measures and a rise in selling prices which offset rising prices for raw materials.
OPERATING PROFIT
Operating profit for the first quarter of 2012 was $125.0 million (15.1% of sales) compared to operating profit of $112.1 million (approximately 14.4% of sales) for the first quarter of 2011.
OPERATING EXPENSES
Operating expenses for the quarter totaled $161.9 million (19.6% of sales), compared with $143.3 million (18.4% of sales) for Q1 2011 arising from increased expenditures targeted to support the Company's further growth and expansion primarily R&D and selling expenses.
INCOME BEFORE TAX
Income before tax for the first three months of 2012 was $101.6 million compared to $88.0 million for the first quarter of 2011, an increase of 15.5%. The increase in income before tax stemmed from improved profitability and higher sales.
NET INCOME
Net income for the first three months of 2012 was $89.3 million compared to $91.7 million for the first quarter of 2011, a reduction of 2.7%. Reduced net profit resulted from higher tax expenses in the quarter compared with tax income for the first quarter of 2011.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
EBITDA during Q1 2012 was $163.2 million, equal to 19.7% of sales compared to EBITDA of $143.2 million (18.3% of sales) for the comparable period in 2011, representing a 13.8% growth rate.
CASH FLOW
The Company recorded a negative cash flow from operating activities of $39.9 million during the first quarter of 2012 compared to positive cash flow of $19.4 million in the first quarter of 2011. The reduced cash flow from operations stemmed primarily from an increase in working capital that supports the Company's growth and business expansion. Free cash flow (excluding short-term investments) in the first quarter of 2012 amounted to negative cash flow of $101.5 million compared to negative cash flow of $51.4 million for the corresponding quarter in 2011.
FINANCING EXPENSES
Financing expenses totaled $21.3 million for the three months ended March 31, 2012 compared to $22.5 million for Q1 2011. The decrease in financing expenses for the quarter is attributable to higher interest rates resulting from the issue of additional Series B and D debentures in January 2012, no financing expenses resulting from the Company's Series B and C debentures which are linked to the Israeli CPI which didn't change during the quarter, and finance income reported in the quarter in respect of the Company's hedging transactions.
About Makhteshim Agan
Makhteshim Agan Industries Ltd. is a leading manufacturer and distributor worldwide of crop-protection solutions and the largest off-patent player in the industry. The Company supplies efficient solutions to farmers that assist them in combating disease and increasing yields. In 2011, the Company's revenues were over $2.69 billion, and it is ranked seventh in the world in the overall agro-chemicals industry. The Company is characterized by its know-how, high-level technological-chemical abilities, expertise in product registration, and observance of strict standards of environmental protection, stringent quality control and global marketing and distribution channels. For more information, visit us at http://www.ma-industries.com.
Contact:
Rony Patishi-Chillim
SVP of Global Corporate Communications
+972-73-2321131
Email: [email protected]
SOURCE Makhteshim Agan Group
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