Shares in 'transformed' Plant Health extend bounce

Shares in Plant Health Care extended their revival after the loss-making agricultural biochemistry group said that, after a "transformative" year, it was "now a stable company", foreseeing a replacement to Monsanto on its customer list.

Shares in the group - which has in the last year changed its chief executive, sealed a deal with agrichemicals giant ArystaLifeScience, sold a Dutch subsidiary to local managers and raised $20m from shareholders rose 3.4% to 63p in morning deals in London.

That was their highest in five months, and a jump of more than 50% from a two-year low reached in mid-February.

The rise came followed the group's release of results for 2013 which - while showing an 11th successive year in the red, with losses widening 8.1% to $6.88m beat some forecasts.

Analyst Sophie Jourdier at Liberum, the UK broker, termed the results "solid", beating her forecasts of an $8.3m after-tax loss.

'Now a stable company'

Christopher Richards, the Plant Health Care chairman, said that 2013 had been a "transformative year" for the group, whose portfolio aims to boost yields by stimulating plants' own defensive qualities, through the Harpin product, and drought resistance and fertilizer uptake, through the Myconate product which encourages root growth.

Directors were "increasingly confident about the value of the group's existing products and of its research portfolio", Dr Richards said.

"Your board considers that Plant Health Care is now a stable company."

Industry trend

Dr Richards, who is also chairman at Arysta, said that Plant Health Care was well placed to exploit a trend of "increasing investment in biological products", the new wave of agrichemicals offering more advanced and targeted responses than the blanket coverage of traditional sprays.

"The major agrochemical companies are now devoting more resources to biological products and seeking partnerships with companies such as Plant Health Care in order to build their product pipelines," he said.

 Indeed, Paul Schmidt, in his first full-year results statement since becoming Plant Health Care chief executive last year, said that its release last year from an ill-fated agreement with Monsanto over Harpin would herald contracts with other large groups.

"A number of companies have identified substantial yield increases from the inclusion of Harpin in their seed treatment products and we expect to conclude an agreement with at least one of these over the coming months," Mr Schmidt said. 

Broker reaction

The group reported a 20% rise to $7.46m in revenues for 2013, with the growth in losses reflecting a $2.1m one-off boost to costs from the company's restructuring, which triggered $1.71m in severance payments and $282,000 in relocating to new headquarters in North Carolina.

Underlying administrative expenses eased 3.0% to $3.61m.

At Liberum, Ms Jourdier said that Plant Health Care appears to have been restructured "successfully and can now focus on growing sales of Harpin and Myconate.

"Biological agrochemicals are one of the fastest growing areas of the industry. We believe Plant Health Care has the technology and the management to drive substantial growth and value creation."

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