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 distribution deal.

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 year.

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.

Market reaction

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 them.

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 signed soon.

"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.