Plant Health Care flagged a boost to its prospects as US
growers seek products to protect yields against drought even as it unveiled a further period of losses, with sales depressed to major client Monsanto.
Plant Health Care said that field trials with "several major
companies" had shown that its Myconate spray "can enhance drought resistance
in field crops" – a topic at the top of the agricultural agenda given crop
losses to lack of rain in Russia and the US.
"With much of the North American Corn Belt having suffered
its worst drought in more than 20 years, these results have attracted
considerable attention," the group said, claiming that Myconate can boost
farmers' income per acre by nearly $60, and "provide a 10-fold return on investment".
US farmers have lost some $8.0bn in profits because of the drought, farm equipment giant Deere & Co said last week.
This was at a time when major farm sprays groups were already "showing
increased interest" in alternative agrichemicals companies, such as Plant
Health Care, whose products stimulate plants' own defence systems rather than
directly, for example, killing pests.
The company has so far in 2012 signed agreements with Japan-based
farm sprays giant Arysta LifeScience, Canada-based fertilizer-to-farm retail
group Agrium, and Israel's Makteshim Agan Industries, the biggest maker of
Trading in the July-to-December half had "started positively",
said group chairman Christopher Richards, who is also chairman of Arysta
"I expect great things from this business," said Dr Richards, who was appointed to the Plant Health Care role three weeks ago.
However, Plant Health Care unveiled a loss of $3.55m for the
January-to-June half - double that of a year before, when the group recorded a gain on an asset disposal - on sales down 0.8% at $3.49m.
At an operating level, losses fell 4.0% to $3.59m.
Use of Harpin - the group's other key product, which
promotes resistance against pests such as nematodes – soared in the US, where the
area planted with soybean seed treated with the chemical soared five-fold to
The increased area "clearly demonstrate that farmers are
obtaining good results from the use of Harpin and that they see it as good
value for money", he said.
Monsanto runs down
But the impact on revenues was constrained by the large
stocks of the chemical that major client Monsanto already had.
"On-ground use of Harpin in field crops in the US through
Monsanto… was not reflected in sales. Monsanto continues to deplete inventory
which they bought in 2009," Dr Richards said.
In London, analysts at Nomura Code said that the results showed "strong" underlying progress, adding that they were "also reassured by a highly-positive opening statement" from Dr Richards.
The broker restated a "buy" rating on Plant Health Care shares, with a target of 110p.
The shares closed up 5.0% at 105p, their strongest finish since September 2010 and more than double late-June levels.
The stock has received support from speculation it could
become a takeover target, after Bayer's near-$500m takeover of AgraQuest, the
US-based agrichemicals group.