A revival in Plant Health Care's share price went into
reverse after the alternative agrichemicals group said that investors were
being too optimistic on its revenues from tie-ups, despite announcing a fresh
Plant Health Care, whose clients include Agrium and
Monsanto, said that while it was forecasting "good growth" in revenues from
contracts with other companies for using or distributing its products, these
sales would be "at lower levels than currently indicated by market forecasts".
The caution came even as the group revealed it had signed a "multi-year"
agreement with Dalgety Agra Polska, the Polish-based agronomy chain owned by
Ireland's Origin Enterprises, for distributing myconate, which encourages root
growth, so boosting fertilizer uptake and drought resistance in crops.
The deal in Poland, the European Union's third-ranked grains
producing country after France and Germany, will generate revenues in the current
Deal in the offing
However, many of the group's deals have taken longer to seal
than initially expected – as highlighted by another announcement on Monday that
a deal on harpin, a Plant Health product which boosts nematode resistance, that
was expected to have wrapped up in December was still outstanding.
"The partnership agreement… is expected to be completed
shortly," the group said.
The group's chairman since June, Chris Richards - also
chairman of Arysta LifeScience, the Japan-based agrichemicals giant which is
also a Plant Health partner – has moved for a more cautious handling of
licensing deals, a person familiar with the group said.
"We are talking about technological licensing deals which
can take a long time," the person said.
Nomura Code, the Plant Health Care house broker, said that the
group's "more cautious approach to forecasting the potential" from tie-ups "is
understandable" given the "significant delays" that can occur in negotiating
Nomura Code analyst John-Marc Bunce, restating a "buy"
rating on Plant Health Care shares, termed as "positive" news of the Polish
deal, and "reassuring" the assertion that the delayed harpin contract would be
"We expect this deal to be significant with the potential
for a circa-$1m upfront payment which would demonstrate significant value seen
in the product by another well-known agrichemicals company," Mr Bunce said.
Plant Health Care shares, which rose more than 8% last week,
reversed most of those gains on Monday, closing 6.6% down at 77.5p in London.