Makhteshim Agan Industries sounded a note of caution over costs for agrichemical groups even as it followed rivals in unveiling a boost from the strong start to South America's sowing season.

The top maker of generic agrichemicals, in a results statement covering its last months before being bought by China-based ChemChina in a $2.4bn deal, flagged that "raw material prices began to rise during the reporting period", the July-to-September quarter.

The trend was "liable to continue", the company said, raising a cloud over the boost to margins from a long-awaited improvement in the market which has allowed agrichemical groups to start raising prices again, after two years of declines.

MA Industries said it had lifted prices of sprays "selectively and moderately" during the quarter, although values in North America remained "slightly lower" than a year before.

Raw materials costs, which account for about 75% of MA Industries' sales costs, are mainly "distant derivatives of oil prices and therefore, an increase or decrease in oil prices affects the prices of raw materials", the group said.

It ended the quarter without any hedges against prices of oil or raw materials.

Crop price boost

The comments came as the group unveiled a return to third-quarter profit, of $10.1m, compared with an after-tax losses of $56.2m in the same quarter a year before.

Sales rose 19.8% to $638.5m, led by Latin American takings, which grew 29%, lifted by a Mexican takeover besides the strong start to the region's soybean planting period also highlighted by rivals such as BASF, Dow Chemical and DuPont.

Revenues from Europe, the group's top market, rose 8.2% to $207.0m

"Rises in prices for agricultural produce compared with the corresponding quarter of the previous year, as well as better weather conditions…  [increased] sales volumes in the industry including for the company's products," MA Industries said.

Yang Xingqiang, appointed the group's chairman following the completion of the ChemChina deal last month, said that MA Industries "now has a strong platform to launch the next stage of its growth strategy".

Landmark acquisition

The ChemChina deal, the largest Chinese takeover of an Israeli company, saw the Chinese group buy 53% of MA Industries from the market, and a further 7% from Koor Industries.

Koor Industries, part of holding company IDB Group and also a big shareholder in Credit Suisse, maintains a 40% stake in MA Industries.