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MA Industries heralds potential for Chinese sprays

Makteshim Agan Industries heralded the potential for creating a "meaningful" business in China, which would boost sales of Chinese-made agrichemicals in the West, as it flagged the support to profits from rising prices.

The world's biggest maker of off-patent farm sprays - in which ChemChina purchased a majority stake last year - said "nothing formal has been agreed" yet on the purchase of assets from the Chinese chemicals giant.

However, in a change to the script of past statements, Israel-based MA Industries said that acquiring ChemChina assets would allow it to "create meaningful operating and commercial infrastructure in China", both a large manufacturing and consuming country for agrichemicals.

Building up in China would enable MA Industries to use its "international sales and distribution channels" to sell ChemChina products.

A glut of Chinese glyphosate weedkillers was blamed for a downturn in that market two years ago which hit Western manufacturers, such as Syngenta and Monsanto, of branded alternatives.

MA Industries said that gearing up to sell ChemChina products through its global distribution network, which is particularly strong in Europe, but also encompasses North and South America and Asia, "may require several years".

Price rises

The comments came as MA Industries unveiled a rise of 30% to $13.1m in earnings for the July-to-September quarter, a reflection largely of a drop to finance costs fostered by exchange rates movements and its hedging strategy.

Currency movements had proved less of a support to operating results, with a weaker euro and rupee cutting the size of, dollar denominated, revenues.

However, the group said that rises in raw material costs had, in putting upward pressure on agrichemical prices throughout the sector, allowed it to lift its prices, supporting revenues.

Overall, it achieved rises in sales volumes too, despite the extra charges to farmers, although volumes fell in Brazil - besides in North America, "a reflection of the fall in demand resulting from the drought in the US".

'Impressive growth'

Asia proved the strongest market, see growth of 10.7% to $130.2m in revenues, a reflection of new products, "impressive growth" in Thailand and, in India, the lateness of the monsoon, which allowed sales to stage a delayed rise.

That regional performance far exceeded the group average of a 0.8% rise to $643.5m in revenues.

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