(Extract from the Interim Report for Auriga Industries A/S
for the period January 1, 2005 – June 30, 2005)
Cheminova's revenue was a little smaller than in the first half of 2004. Profit before tax was DKK 222 million. - Low USD exchange rate.
| Figures in DKKm |
1st half 2005 |
1st half 2004 |
|
Revenue
Profit/loss on ordinary operation before
depreciation, amortisation and
write-downs (EBITDA)
Operating profit (EBIT)
Net financials |
1,964
340
253
(31) |
2,042
435
339
(8) |
| Profit before tax |
222 |
331 |
|
Cash flow from ordinary activities
Cash flow from operating activities
Cash flow from investing activities |
162
19
(33) |
75
17
(25) |
| Available cash flow |
(14) |
(8) |
|
Investments in property, plant and
equipment
Depreciation and amortisation |
33
87 |
18
95 |
|
Profit margin (EBITDA)
Profit margin (EBIT) |
17%
13% |
21%
17% |
Despite difficult market conditions, Cheminova returned a profit before tax for the first six months of DKK 222 million (DKK 331 million). The results exceed expectations at the beginning of the year.
In the first half of the year, Cheminova has settled its net revenue in USD at a considerably lower exchange rate than in 2004. The lower USD exchange rate in first half 2005 has meant a reduction in operating profit of approx. DKK 90 million relative to the same period last year.
Translated into Danish kroner, revenue totalled DKK 1,964 million (DKK 2,042 million). Operating profit was DKK 253 million (DKK 339 million) and is virtually unchanged relative to first half 2004 when taking account of the lower USD exchange rate.
Net financials amounted to DKK 31 million (DKK 8 million). The increase is attributable to price adjustments in the parent company as well as lower interest income from trade receivables in Brazil
Cash flow from ordinary activities increased by DKK 87 million to DKK 162 million. The extraordinarily strong results for 2004 have resulted in a considerable increase in taxes paid, which means that available cash flow for first half 2005 was in line with last year.
Market development
Except in North America, first half of 2005 was, unlike first half of 2004, characterised by unfavourable climatic conditions. Spring arrived late in the northern parts of the EU and Eastern Europe, while the southern EU member states, Brazil and Australia has suffered from drought.
Prices of virtually all crops, with exception of soya, were lower than in 2004, which meant that farmers have not had the same incentive to protect their crops as in 2004.
So far in 2005, the Brazilian currency has been strengthened considerably relative to the USD. For exporting Brazilian farmers, this has meant a loss of income relative to last year.
It is believed that the global market for pesticides in first half 2005 was slightly down relative to first half 2004.
Sales
Cheminova’s revenue for first half was satisfactory and largely in line with expectations by the beginning of the year. However, climatic conditions meant that individual markets developed quite differently.
Revenue in Europe generally did not live up to expectations, with Russia and France being notable exceptions. Increase in revenue in France is attributable in particular to good sales of the herbicide glyphosate.
Satisfactory development in revenue in the first quarter in the USA continued in the second quarter. Contributing factors were strong sales of glyphosate and an early start of the boll weevil eradication programme in cotton.
In Latin America, Cheminova Mexico saw a considerable increase in revenue. In Brazil, revenue was affected by the drought with lower sales of glyphosate than expected.
Despite the delayed arrival of the monsoon, Cheminova India had a satisfactory half-year with an increase in revenue relative to the year before.
Cheminova has decided to set up sales subsidiaries in Poland and Bulgaria. This means that Cheminova will be represented by its own sales subsidiaries in fourteen countries.
New products
Sales of Cheminova’s new products, including the insecticide gamma-cyhalothrin, have developed satisfactorily and in line with expectations.
In April, Cheminova entered into a collaboration agreement with Bayer AgroScience concerning the insecticide Imidacloprid. Under the agreement, Cheminova has acquired global rights to sell its own formulations based on Bayer’s active ingredient. Imidacloprid is the world’s leading insecticide with annual sales of approx. EUR 650 million. This new product will in the coming years contribute significantly to Cheminova’s revenue and earnings.
Outlook 2005
The season in Europe is largely over by the end of the first half. The revenue and results for second half are therefore largely dependent on market developments in Latin America and on the progress of the US boll weevil eradication programme.
Cheminova’s expected net position in USD has been hedged by means of forward exchange contracts for 2005 as a whole at an average exchange rate of DKK 6.00 against DKK 7.00 in 2004.
Assuming that market conditions will be normal in second half, Cheminova is expecting revenue of approx. DKK 4.0 billion for 2005 as a whole and a profit before tax of approx. DKK 370 million. At the beginning of the year, the outlook for 2005 was a profit before tax of approx. DKK 320 million calculated in accordance with the new IFRS rules.
August 23, 2005
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The total Interim Report can be found on Auriga's website www.auriga-industries.com.
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