Makhteshim Agan Industries Ltd. (TASE: MAIN) today published its financial report for the fourth quarter of 2007 and for the year as a whole. The agrochemical maker posted a net profit of $20.2 million for the fourth quarter, compared with a net loss of $38.5 million for the corresponding quarter of 2006, caused by one-time provisions. Revenue rose 13.6% to $475.8 million for the fourth quarter from $419 million for the corresponding quarter. The company barely beat its lowered profit guidance announced two months ago.
On January 10, Makhteshim Agan published a profit warning, and the share promptly fell 16%. In its revised guidance for the quarter, the company cut its expected net profit to $14-20 million on $465-485 million revenue. For the year as a whole, the company predicted a net profit of $172-178 million on $2.07-2.08 billion. It achieved this guidance.
In the warning, the company attributed the lower guidance to the shekel's appreciation against other currencies; most of the company's revenue is overseas, while most of its costs, including salaries, are denominated in shekels. An additional factor was higher raw materials and energy costs with no commensurate increase in product prices, due to competition in global markets.
For the year as a whole, Makhteshim Agan posted a record $2.08 billion revenue in 2007, up 17% on the $1.78 billion in 2006. Net profit totaled $178.2 million, compared with $83.9 million in 2006 (excluding one-time provisions, the 2006 profit was $139.2 million). The company attributes the increase to higher sales and lower operating expenses thanks to streamlining measures.
A breakdown of sales numbers, showed that agro sales rose 20% to $1.89 billion in 2007 from $1.58 billion in 2006. Most of the growth was in Europe, where sales rose 18.5% to $817.7 million from $690 million the year before, and in South America, where sales rose 26% to $542.8 million in 2007 from $430 million. The company attributes much of its South American growth to strong demand in Brazil. North American sales rose 11.8% to $390.8 million from $349.4 million in 2006.
Makhteshim Agan chairman and CEO Avraham Bigger noted that the company was benefiting from "strong demand in the crop protection sector stemming from the rise in global standards of living and an upward trend in prices of soft commodities and increased planted acreage.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2008
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