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Plant Impact to expand into 'very tough' US market

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Plant Impact revealed the launch into fresh countries of its headline brands, and further products on the way, as the crop enhancement group unveiled a rejig which will see it focus on its strongest markets.

The group - whose products aim to boost yields by improving, for example, nutrient intake or flowering, rather than the direct gains targeted by traditional fertilizer applications – said that it was to launch an advanced version of its flagship Veritas product in countries including the key US market.

"Revenue from outside Brazil," where Plant Impact has sold Veritas since striking a deal with Bayer two years ago, "is expected to grow over the financial year" to the end of July 2017, said John Brubaker, the group's chief executive.

"The group has announced new product launches in Argentina and Paraguay and anticipates first material sales in the US," the biggest soybean-producing country.

'Very tough place'

The US launch is expected in spring, in time for orders ahead of the key summer application period, Mr Brubaker told Agrimoney.com.

He added that a "big challenge in the US is that nobody has heard of us", meaning a public relations offensive, and despite the fact that Mr Brubaker himself is a US citizen, and Yale University graduate.

The US market place, while big, was a "very tough place" thanks to strong competition, but "if you can demonstrate the value of what you are offering to customers, they will buy", he said.

'Important year'

The launch will be part of a year that Mr Brubaker said would be an "important one" for Plant Impact, "in consolidating the longer-term prospects of the group" as well as establishing the new sector of crop enhancement products "as an important and trusted category" of agrichemicals.

The group aimed in the year to fulfil more of the potential of its mainstream products, which also include the Banzai cocoa improvement spray, in part to "generate enough cash to fund exciting products we have in the pipeline", he said.

These include two soybean products - a seed treatment which Plant Impact says improves crop yields by encouraging the establishments of root fungi which improve plants' ability to fix nitrogen from the air, and a spray which helps crops take-up herbicides.

Operationally, Plant Impact also revealed a rejig which is seeing it revamp its marketing in favour of working through its distribution partners Bayer and Arysta, and in markets.

The company is "reducing… efforts in the 'direct to market' elements of our work, principally in Europe and the Middle East, in favour of fully resourcing the larger opportunities in the Americas with soybean and our so far single step out into cocoa", said David Jones, the Plant Impact chairman.

Mr Brubaker told Agrimoney.com: "As with any company, we have some projects that we think will generate returns more quickly than others."

Market reaction

Indeed, he said that "revenues in Europe and the Middle East were disappointing" in the year to Jul 2016, "as political issues in the Middle East and market challenges in continental Europe and the UK led to a year-on-year reduction in revenues from these areas".

Nonetheless, group sales soared 60% to £7.2m, led by growth in Brazilian demand for Veritas.

Plant Impact reported a full-year loss of £700,000, compared with earnings of £100,000 a year before, thanks to a boost to operating costs from "the increased headcount and on-costs associated with the strategy of geographic expansion and increased research and development".

Broker Peel Hunt restated a "buy" rating on Plant Impact shares, with a 70p price target, citing the potential for product sales.

"The company has significantly enhanced its internal resources, which should accelerate the ability to commercialise the existing products as well as develop the pipeline," Peel Hunt analyst Charles Hall said.

Plant Impact shares closed up 1.4% at 50.2p.

By Mike Verdin

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