Makhteshim Agan Reports Continued Top And Bottom Line Growth For Second Quarter And First Half Of 2013

TEL-AVIV, Israel, Aug. 7, 2013 /PRNewswire/ -- The Makhteshim Agan Group ("MAI" or the "Company"), the world leader in branded off-patent crop protection solutions, today reported financial results for the second quarter and first half ended June 30, 2013.

FINANCIAL HIGHLIGHTS

* Excluding FX effect, sales grew by 3.8% for the second quarter, and 6.2% for the first half.

MANAGEMENT COMMENTS

Commenting on the results, Mr. Yang Xingqiang, Makhteshim Agan's Chairman of the Board, said, "The second quarter was a period of rising sales in most regions despite challenging weather and currency environments, enabling MAI to deliver additional net profit growth. At the same time, we have made important progress in the integration and buildup process of an operational and commercial platform in China for MAI, which will contribute to MAI's future business success."  

Mr. Erez Vigodman, President and CEO of Makhteshim Agan, commented, "We have continued our business momentum in the second quarter despite a variety of market challenges. We remain focused on enhancing further our operational platform alongside with continued advancement in key strategic initiatives.

The progress we have been making in China supports our pursuit to establish a strong foundation for our global activities and continued sustainable growth."

DISCUSSION OF FINANCIAL RESULTS

SALES
MAI's revenues for the second quarter of 2013 were $803.3 million, a 2.5% increase compared with the $783.4 million generated in the second quarter of 2012. In constant currency terms, sales increased by 3.7% year-over-year. The increase derived primarily from rising quantities sold and higher selling prices. Sales in North America were negatively impacted by severe weather conditions and higher channel inventories.

For the first half of 2013, sales increased by 4.8% rise to $1,688.6 million from $1,611.5 million in the first half of 2012.  Excluding the foreign currency effect, sales for the period increased by 6.2%.

Following is a breakdown of revenues by region:

European sales for the second quarter totaled $340.6 million, a 6.2% increase compared with $320.6 million in the second quarter of 2012. The growth stemmed primarily from an increase in quantities sold and from higher selling prices despite the severe weather conditions. For the first half of 2013, sales totaled $776.6 million, a 4.4% increase compared with $744.2 million for the first half of 2012. This reflected increased selling prices and quantities sold. Effective exchange rates during the reporting period were lower than those prevailing in the parallel period of 2012 negatively effecting year over year comparisons. 

Revenues from Latin America for the second quarter increased by 1.8% to $139.8 million from $137.3 million in the second quarter of 2012. For the first half of 2013, sales increased by 9.6% to $268.2 million from $244.7 million in the first half of 2012. Sales growth in the region derived from the combination of increased quantities sold and improved selling prices.

Sales in North America for the quarter totaled $150.8 million, an 11.1% decrease compared with $169.6 million for the second quarter of 2012. The decline derived primarily from adverse weather conditions that prevailed during the period, resulting in a reduction in agricultural activities and commodity prices, and therefore of quantities sold of the Company's crop protection products.

For the first half of 2013, North American sales decreased by 1.6% to $296.6 million from $301.5 million in the first half of 2012.

Revenues from Asia Pacific, Africa and Israel for the quarter totaled $172.0 million, a 10.3% increase compared with $155.9 million for the second quarter of 2012. For the first half of 2013, sales increased by 8.2% to $347.3 million from $321.1 million in the first half of 2012. The increase derived primarily from favorable weather conditions in India and Australia, which contributed to rises in quantities sold, countered partially by decreases in selling prices and the erosion of currencies throughout the region.  

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

EBITDA for the second quarter of 2013 totaled $132.6 million, or 16.5% of sales. This was a 2.6% decrease from the $136.1 million, or 17.4% of sales, recorded in the second quarter of 2012.

For the first half of 2013, EBITDA totaled $301.0 million, or 17.8% of sales. This was a 0.6% increase from $299.3 million, or 18.6% of sales, recorded in the first half of 2012.

GROSS PROFIT & GROSS MARGIN

Gross profit for the quarter totaled $253.4 million, or 31.5% of sales, a 0.5% decrease compared with the $254.6 million, or 32.5% of sales, recorded in the second quarter of 2012. For the first half of 2013, gross profit totaled $548.2 million, or 32.5% of sales, a 1.2% increase compared with $541.6 million, or 33.6% of sales, for the first half of 2012.

The change in gross profit margin in the quarter and in the first six months resulted mainly from a rise in raw material prices and lower effective exchange rate level in comparison to the corresponding period in 2012, which was partially offset by improved product mix.

OPERATING EXPENSES & OPERATING PROFIT

Operating expenses for the quarter totaled $160.1 million (19.9% of sales), a 4.1% increase compared with $153.9 million (19.6% of sales) for Q2 2012.

Operating income for the second quarter of 2013 declined 7.4% to $93.3  million, or 11.6% of sales, from $100.8 million, or 12.9% of sales, for the second quarter of 2012.

For the first half, operating income decreased by 0.6% to $224.4 million from $225.8 million in the first half of 2012.

NET INCOME

Net income for the second quarter of 2013 increased by 14.7% to $48.2 million from $42.0 million in the second quarter of 2012. For the first half of 2013, net income increased by 5.4% to $138.4 million from $131.3 million in the first half of 2012.

CASH FLOW

During the first half of 2013, the Company improved its working capital and recorded positive cash flow from operating activities of $67.0 million compared with negative cash flow of $(8.2) million during the first half of 2012.

CHINA INTEGRATION UPDATE

The Company is continuing to promote the process of examining the acquisition of all or part of the shares or assets of several companies, which are controlled by CNAC. 

In connection with the process, MAI's management was authorized to approach the Chinese authorities to approve an outline to launch a partial tender offer to purchase all or a part of the class B shares held Hubei by the public shareholders of Hubei  Sanonda Co., Ltd., a public company controlled by CNAC, which is active in the Agrochemical industry and which shares are traded on the Shenzhen stock exchange.

Further Information

All financial and legal filings, together with a presentation of the quarter's key financial highlights, can be accessed through the Company's website at www.ma-industries.com.

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 2012, the Company's revenues were over $2.83 billion, and it is ranked seventh in the world in the 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 www.ma-industries.com.

Contact:

Rony Patishi-Chillim
SVP of Global Corporate Communications
Email: [email protected]
+972-73-2321939

SOURCE Makhteshim Agan