Makhteshim Agan Reports Continued Strong Financial Results
19.8% Revenue Growth Reflects Expansion in All Regions Quarter over Quarter; Tripling of EBITDA & Improved Margins Demonstrate Continuing Successful Execution of Comprehensive Change Plan & Improved Product Mix
TEL-AVIV, Israel, November 7, 2011 /PRNewswire/ --
Net Income up 444.9% for the first Nine Months
Merger of MAI & ChemChina Completed on October 17th
The Makhteshim Agan Group ("MAI") (formerly TASE: MAIN), the world leader in branded off-patent crop protection solutions, today reported its financial results for the three-month and nine-month periods ended September 30, 2011.
FINANCIAL HIGHLIGHTS
Below are key financial metrics for the third quarter 9/30/11:
In millions 3Q 2011 3Q 2010 Change 3Q 2010 3Q 2010 Change
of US$ As As (as
reported* reported* reported) Non-GAAP Non-GAAP+ (Non-GAAP)
Sales 638.5 533.1 19.8% 638.5 533.1 19.8%
EBITDA 83.3 23.5 256.2% 83.3 37.1 125.6%
Gross profit 197.7 135.2 46.2% 197.7 143.7 37.6%
Gross margin 31.0% 25.4% 31.0% 27.0%
Operating
profit 50.1 (4.6) NA 50.1 9.0 459.4%
Net income 10.1 (56.2) NA 10.1 (22.7) NA
*2010 as reported numbers reflect extraordinary charges.
+ 2010 Non-GAAP numbers exclude aforementioned extraordinary charges.
Below are key financial metrics for the nine months ended 9/30/11:
In millions 1-9/ 2011 1-9/ 2010 Change 1-9/ 2011 1-9/ 2010 Change
of US$ As As (as
reported reported* reported) Non-GAAP+ Non-GAAP+ (Non-GAAP)
Sales 2,142.1 1857.2 15.3% 2,142.1 1857.2 15.3%
EBITDA 346.0 227.1 52.5% 346.0 240.7 43.9%
Gross
profit 691.7 543.2 27.3% 691.7 551.6 25.4%
Gross
margin 32.3% 29.2% 32.3% 29.7%
Operating
profit 249.3 146.0 70.8% 249.3 159.5 56.2%
Net income 147.2 27.0 444.9% 147.2 60.5 143.3%
*2010 as reported numbers reflect extraordinary charges
+ Non-GAAP numbers exclude aforementioned extraordinary charges.
Mr. Yang Xingqiang, Makhteshim Agan's newly appointed Chairman of the Board, commented, "2011 has been a year of rapid progress for Makhteshim Agan. As reflected in the Company's improving results, MAI has succeeded in implementing a comprehensive change plan that has improved efficiency while enhancing its competitive position and its offering of quality, reliable solutions to customers throughout the world. During October, I had the pleasure of joining MAI as its new Chairman of the Board upon closure of the ChemChina transaction. With the transaction completed, I am confident that MAI now has a strong platform to launch the next stage of its growth strategy."
Mr. Erez Vigodman, President and CEO of Makhteshim Agan, commented, "The third quarter was another period of revenue growth, margin expansion and significantly improved profits for Makhteshim Agan. The period's top-line results reflect the continued strong performance of each of our regions, including the improved performance of our business in Brazil, the newly acquired Korean and Mexican operations as well as the acquisition of the active ingredient diuron. We have succeeded in tripling our EBITDA and more than doubling our net income, accomplishments that confirm the value of our ongoing company-wide streamlining initiative.
"In an atmosphere of rapid change and growing agricultural challenges, we continue to excel at offering a portfolio of effective, simple crop protection solutions to address our customers' needs - an approach which begins with a personal relationship that gives us insight into their true challenges, and extends through a broad portfolio of products supported by a strong operational and commercial platform. We believe that the ChemChina merger will help us take all of these capabilities and more to the next level, resulting in another significant advancement that will accrue to the benefit of all our stakeholders."
SALES
MAI's sales for the third quarter of 2011 totaled $638.5 million, up 19.8% compared with $533.1 million recorded in the third quarter of 2010. This reflected an increase in overall quantities sold, including the significant contribution of the Latin American region, and the full consolidation of the Company's new activities in Korea and Mexico.
Sales for the first nine months of 2011 totaled $2,142.1 million, a 15.3% increase compared with $1,857.2 million for the first nine months of 2010.
Regional highlights: Following is a breakdown of sales by geographic region:
In millions of US$ Q3 2011 Q3 2010 Change 1-9/2011 1-9/ 2010 Change
Europe 207.0 191.4 8.2% 911.8 825.0 10.5%
Latin America 192.1 149.6 28.5% 420.2 371.3 13.2%
North America 95.6 74.5 28.2% 373.6 320.6 16.6%
Asia Pacific &
Africa 117.6 98.0 20.0% 358.3 277.2 29.3%
Israel 26.1 19.6 33.2% 78.2 63.1 23.9%
- Latin America: Sales of the Company's Latin American region grew by 28.5% year-over-year, reflecting improved performance in Brazil, together with the integration of the Mexico acquisition.
- North America: The Company's North American sales increased by 28.2% year-over-year, reflecting a significant increase in quantities sold, which compensated for a slight decrease in the level of prices that prevailed during the period relative to the comparison period.
- Asia Pacific & Africa: Sales of Asia Pacific & Africa region grew by 20.0% year-over-year, driven by increased quantity sales and by the strengthening of the Australian dollar compared to the US dollar.
- Europe: Sales of the Group's European region grew by 8.2% year-over-year, reflecting an increase in quantities sold (especially in Eastern Europe) and by a positive currency effect.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
EBITDA for the third quarter of 2011 totaled $83.3 million, or 13.0% of sales, a 256.2% increase compared with $23.5 million, or 4.4% of sales, for the third quarter of 2010. For the first nine months of 2011, EBITDA totaled $346.0 million, or 16.2% of sales, a 52.5% increase compared with $227.1 million, or 12.2% of sales, for the parallel period of 2010.
GROSS PROFIT
Gross profit for the third quarter of 2011 increased by 46.2% to $197.7 million from $135.2 million (including the effect of one-time charges) for the parallel period of 2010. Gross margin for the quarter was 31.0%, up 4.6 basis points compared with 25.4% for the same period in 2010. For the first nine months of 2011, gross profit increased by 27.3% to $691.7 million from $543.2 million for the first nine months of 2010. Gross margin for the period was 32.3%, compared with 29.2% for the first nine months of 2010.
The significant improvement in both gross profit and gross margin reflected the increase in sales volumes, a shift in the product mix toward higher-profit products, and the positive effects of operational initiatives launched in 2010 and continued in 2011.
OPERATING PROFIT
Operating profit for the third quarter of 2011 totaled $50.1 million (7.8% of sales) compared with an operating loss of $4.6 million (0.9% of sales) for the third quarter of 2010. For the first nine months of 2011, operating profit totaled $249.3 million (11.6% of sales) compared with $146.0 million (7.9% of sales) for the first nine months of 2010.
OPERATING EXPENSES
Operating expenses for the third quarter totaled $147.6 million (23.1% of sales), compared with $139.9 million (26.2% of sales) during the third quarter of 2010. For the first nine months of 2011, operating expenses totaled $442.4 million (20.7% of sales) compared with $397.2 million (21.4% of sales) in the first nine months of 2010.
The increase reflected a rise in the Company's sales and marketing expenses, due primarily to fluctuations in the value of the Company's local operating currencies as expressed in dollar terms.
NET INCOME
Net income for the third quarter of 2011 totaled $10.1 million (1.6% of sales), compared to a net loss of $(56.2) million in the third quarter of 2010 (including one time charges). For the first nine months of 2011, net income totaled $147.2 million (6.9% of sales), an increase of 444.9% compared with $27.0 million (1.5% of sales) for the first nine months of 2010 (including one time charges).
CASH FLOW
During the third quarter of 2011, the Group recorded negative cash flow from operating activities of $35.9 million compared with a negative cash flow of $117.8 million from operating activities in the third quarter of 2010. For the first nine months of 2011, cash flow from operating activities totaled $252.5 million compared with $168.2 million for the first nine months of 2010. The change reflected the higher profits generated during the period, countered partially by an increase in working capital.
Free cash flow (excluding short-term investments) in the third quarter of 2011 totaled an outflow of $89.5 million compared with negative cash flow of $154.8 million in the third quarter of 2010. For the first nine months of 2011, free cash flow (excluding short-term investments) totaled $57.6 million compared with $36.7 million for the first nine months of 2010. The increase in free cash flow reflects the increased cash flow from operating activities during the period, countered partially by investment activities.
FINANCING EXPENSES
For the third quarter of 2011, financing expenses totaled $32.7 million, a slight decrease compared with $35.6 million for the third quarter of 2010. For the nine months of 2011, financing expenses declined to $80.8 million compared with $95.4 million for the first nine months of 2010. The decrease in financing expenses was attributable primarily to the strengthening of the Company's main operating currencies, which generated income that was moderated by the Company's hedging activities.
BUSINESS COMBINATION WITH CHEMCHINA
On October 17, 2011, the Company announced that 60% of its shares had been acquired by China National Agrochemical Corporation, a full subsidiary of China National Chemical Corporation (ChemChina). ChemChina is one of the top 500 companies in the world and the largest chemical producer in China. The closing occurred following the satisfaction of several closing conditions, including approval of the transaction by MAI shareholders and European, US and Brazilian anti-trust authorities. As of the transaction date, MAI became a private company, 60% of which is owned by ChemChina, and 40% by Koor Industries Ltd., part of the largest Israeli holding company - IDB Group.
The merger between MAI and ChemChina is the largest transaction ever concluded between a Chinese and an Israeli company, and represents a significant milestone in MAI's 65-year history. The merger will create a platform that is optimally suited to the changes in the global agrochemical industry, while positioning MAI to tap the opportunities inherent in these changes.
Based on the desire of both shareholders, MAI's existing management team will continue to lead the Company, and its headquarters will remain in Israel. The Company intends to continue operating all of its existing global manufacturing facilities. In parallel, it will seek to capitalize on its strong base in China to further expand its global infrastructure and its ability to offer the industry's leading portfolio of crop protection solutions.
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 sector. The Company supplies efficient solutions to farmers that assist them in combating disease and increasing yields. In 2010 the Company's sales revenues were over USD 2.37 billion, and it is ranked number 7 in the world agro-chemicals sector. 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
Head of Global Corporate Communications
Email: [email protected]
SOURCE Makhteshim Agan Group,
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