The results of operations of Makhteshim-Agan Industries for the year 2000 and for the fourth quarter of the year testify to the success of the restructuring plan implemented by the company since the beginning of the year. This plan, based on savings and efficiency combined with improving its product portfolio and building new growth engines, resulted in Makhteshim-Agan posting improvement in all the profitability parameters – from net income, operating income and gross profit to cash flows.
The improved profitability at Makhteshim-Agan is noteworthy against the background of the continued contraction of the global agrochemical market, and in view of other conditions, such as the increase in energy costs to industry, weakness in the Brazilian real and the euro, appreciation in the shekel, and the continued decline in agricultural commodity prices.
Ilan Leviteh, CEO of Makhteshim-Agan stated that the dramatic improvement in profitability and in working capital, resulting from the successful implementation of the restructuring plan, led to cash flows from operating activities of an unprecedented $128.5 million, compared with $82.4 million in 1999 and $9.9 million in 1998.
Leviteh said that
Makhteshim-Agan intends to continue to maximize the window of opportunity opened by the expiration of patents, in order to develop and manufacture products having higher gross profitability than the Company's older products.
Makhteshim-Agan will also continue to utilize the opportunities in the global agrochemical market arising because the industry’s leading companies are reevaluating their portfolios. Another wave of product divestments is expected to occur within a year, and the company will continue to focus on identifying and acquiring products that will enable it to strengthen its position, mainly in North America and Europe. He added that the company will consider penetrating new markets, by using acquired products with proven target markets in these countries, and will identify additional opportunities to co-manufacture for multinational companies.
The forecast for renewed growth in 2001 is based only in part on the new products acquired during the past year, and their inherent potential will only be partially realized.
Net income of Makhteshim-Agan Industries for 2000 amounted to $50.2 million, compared with $8.8 million last year. After neutralizing the one-time expenses posted by the company in the forth quarter of 1999, net income increased this year by 50%. Net income for the quarter amounted to $11.2 million, compared with a net loss of $18.0 million in the fourth quarter last year. This represents an increase of 70% over the quarterly net income of $6.6 million obtained after neutralizing the one-time expenses in respect of the restructuring plan.
Operating income increased in the year 2000 by 16%, reaching $107 million, compared with $92.1 million last year. Operating income in the fourth quarter increased by 36.6%, reaching $25 million, compared with $18.3 million in the same quarter last year.
Gross profit increased in the year 2000 by 6%, reaching $273.8 million, compared with gross profit of $257.5 million last year. There was growth of 7.5% in gross profit in the quarter, which amounted to $70.6 million, compared with gross profit of $65.7 million in the fourth quarter of 1999. The principal reason for the increase in gross profit stems from the improvement in the company's portfolio, due to the addition of new products with higher gross profitability. This growth is especially striking against the background of erosion in product prices and erosion in the euro and the Brazilian real, which was offset in part by the decrease in raw material prices originating in the euro bloc.
Sales of Makhteshim-Agan Industries in the year 2000 totalled $856.3 million, compared with $ 852.6 million last year, growth of 0.4%. The company's annual sales turnover was affected by the quantitative growth in the sale of its older products and new products, and from growth in non-agro sales. The company's sales in the quarter increased by 4.5% to $223.8 million, compared with sales of $214.1 million in the fourth quarter of 1999.
During 2000, there was growth in the non-agro sales of Makhteshim-Agan, which totalled $118 million, compared with turnover of $103.2 million in the same period last year. The sales growth stems mainly from the continuing development of the company Lycored, and from the expansion of activities in the optical brightener segment.
Published by Israel's Business Arena on March 18, 2001.