Slow start to the year, but outlook maintained.
(Figures in brackets are figures for 2008)
Despite the difficult global economic situation, Auriga achieved growth of 3% in Q1 2009 at constant exchanges rates. In Danish kroner, revenue was up 1% at DKK 1,440 million, while operating profit was DKK 103 million, corresponding to an EBIT margin of 7%. Auriga maintains its outlook for the year and confirms the ambitious targets set out in Cheminova's business plan “Five-in-Fifteen”.
The global economic crisis is impacting the agricultural sector with farmers in some regions having difficulties obtaining financing for their purchases of seeds, fertilisers and crop protection products. This has – in conjunction with a late spring in North America and the CIS countries (Russia, Ukraine etc.) and drought in Argentina and southern Brazil – led to a slower start to the year than expected for Cheminova.
As expected, glyphosate prices are falling in several markets, but remain higher than for the same period last year. The most important currency, USD, has been settled at an exchange rate which is 10% higher than in 2008, but other currencies have fallen, so that the combined effect of changes in exchange rates on revenue was negative.
Region Europe achieved an increase in revenue, both overall and organically. The acquisition of an additional 25% ownership share in Stähler, which means that Cheminova now owns 75%, has contributed revenue of DKK 57 million as Stähler is fully consolidated from March 1. Sales declined in Cheminova’s other sales regions.
Auriga generated revenue of DKK 1,440 million (DKK 1,430 million) and an operating profit before depreciation and amortisation for the period of DKK 153 million (DKK 170 million), corresponding to an EBITDA margin of 11% (12%). Operating profit was DKK 103 million (DKK 122 million), and after financial expenses of DKK 24 million, profit before tax was DKK 81 million (DKK 109 million).
Outlook 2009
Considerable uncertainty still surrounds market developments, but market analysts expect to see growth of 3-5% in the market. Cheminova still expects to see a strong demand for the remainder of the year and increasing market share. Introduction of several new products during the season, growth from previously launched products and the full consolidation of Stähler for ten months of the year and a higher USD settlement rate are all in all expected to ensure a growth in revenue of approx. 10%. For 2009 as a whole, Auriga and Cheminova thus maintain an outlook of revenue of approx. DKK 6,250 million and an EBIT margin of approx. 9%. Increasing sales will lead to a reduction in inventories, primarily in Q3, which will result in an expected positive cash flow from operating activities.
Business Plan “Five-in-Fifteen”
Cheminova is pursuing an ambitious target of a doubling of its market share to 5% in 2015 through organic growth and acquisitions. At the same time, earnings shall be improved through economies of scale and continued improvements throughout the organisation to ensure that results match the best among peers in the industry. The fulfilment of the ambitious targets is based on a number of important assumptions, but the current global economic crisis is not expected to impact the long-term market prospects, and the targets set out in the plan are therefore maintained.
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The total interim report can be found on Auriga's website www.auriga-industries.com.
May 5, 2009
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