Makhteshim-Agan still growing but below forecasts

Richard Gussow, an analyst at Excellence Nessuah Securities & Investments Ltd., said profitability was "way below" market expectations.

By AVI KRAWITZ
November 16, 2005 07:12
2 minute read.

Agrochemicals producer Makhteshim Agan reported another strong quarter Tuesday, boosted by higher sales in North America, Europe and Australia but shares fell as results came in below market expectations. For the three months ended September 30, net income rose 26 percent to $47.1 million, from $37.3m. in the same period last year, while earnings per share increased to 9 cents from 8 cents, the company said. Revenue reached $402.1m. for the third quarter, showing an increase of about 11% from the $362.8m. recorded in the same period of 2004. "Makhteshim Agan is showing yet another quarter of double-digit growth and, despite difficult climactic conditions this year, we are continuing to grow at a faster rate than the market," said Makhteshim CEO Shlomo Yanai. Yanai said the company continued to show strong sales in the US, where revenue grew 35% in the quarter and 67% since the beginning of the year. "We have also increased our market share in Brazil, the second largest agricultural market in the world, despite difficult market conditions and we are optimistic for a good agricultural season and continued growth there," he added. Nevertheless, analysts were disappointed with the results. Richard Gussow, an analyst at Excellence Nessuah Securities & Investments Ltd., said profitability was "way below" market expectations. Gross profit as percentage of sales was 38.2%, down from 39.7% a year earlier. Gussow said he expected a margin of 39.3. While the Tel Aviv-based company has traditionally focused on the agrochemical market and is ranked seventh in the sector, it had a 20% increase in sales of non-agro products to $51.7m. in the third quarter and an 18% rise to $151.7m. for the year, so far. Last week, Makhteshim's subsidiary LycoRed acquired US-based Buckton Scott Nutrition, for an undisclosed amount, to increase its activities in the non-agro, dietary supplement ingredient market. Makhteshim also announced on Tuesday that it would implement a plan to buy back up to $150 million of its stock. Following the announcements, shares in Makhteshim dropped 3.6% to NIS 25.31 in Tel Aviv.


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