REG - Plant Health Care - Trading Update

Plant Health CareAnnouncement

22/11/2023 07:15

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RNS Number : 2049U  Plant Health Care PLC  22 November 2023

PLANT HEALTH CARE plc

("Plant Health Care" or the "Company")

 

Trading update

 

Plant Health Care(®) (AIM: PHC.L), a leading provider of novel
patent-protected biological products to global agriculture markets, is
announcing an update on trading and the outlook for the full year to 31
December 2023 ("FY23").

 

Highlights

 

·    Market conditions in the wider agriculture market have diminished
over the course of the year, particularly in the recent months;

·    Due to these challenging market conditions, particularly in the key
USA end market, the Company now anticipates revenue in FY2023 to be in line
with or show modest growth over the year ended 31 December 2022 ("FY22");

·    The Company continues to make significant progress in obtaining new
product registrations and widening geographic distribution, positioning the
Company well for growth in 2024 and beyond;

·    Trading in Brazil, Mexico and Europe broadly in line with market
expectations.

 

As highlighted at the time of the Company's interim results in September 2023,
market conditions for traditional agriculture input businesses were extremely
challenging in the first half of the year, and the environment has continued
to deteriorate over recent months. This has been particularly evident in the
US; however, global markets, including Brazil, Europe and some Asian markets,
have also been subdued, leading a number of companies across the sector to
revise guidance on current year performance.

 

Pleasingly, Plant Health Care's trading in Brazil, Mexico and Europe has been
broadly in line with market expectations in the second half of the year, in
spite of these challenging market conditions. However, sales orders in the US
have not materialised as originally anticipated as the Company's distribution
partners in the region have gone through a significant inventory correction.
This has, in large part, been driven by volatility in demand and price
following the global COVID-19 pandemic, as well as the effects of an
increasing interest rate environment and change in growers purchasing habits.
Distributors are shifting demand from Q4 FY23 into H1 FY24 and are planning to
manage lower levels of inventory for FY24. While inventories of the Company's
products with distributors are not high, it is not immune to this structural
change. In addition, regulatory delays in India and a number of other
countries have resulted in delays to some product launches; whilst this is
expected to have a limited impact on the Company in FY23, this is likely to
affect performance more materially in FY24.

 

Accordingly, the Board now anticipates revenue for FY23 to show flat to modest
growth over FY22, with the final result dependent on the timing of expected
orders.  Revenue in FY24 is now anticipated to be approximately 28% lower
than market expectations of $23m, due to lower levels of inventory being
maintained by the Company's distributors and regulatory delays in some
territories.  The Board intends to review operating expenses accordingly.

 

Against this backdrop, the pace of new product registrations and the widening
of distribution partnerships into new geographies continues. Sales of
Harpinαβ are increasing in all of the Company's core markets, excluding the
US market. Critically, the first products from the new PREtec platform are
being well received in the market, with successful product launches across
three continents. Although there are some delays to product launches, the
growth trajectory is clear for the medium term. After more than 10 years and
an investment in excess of $30m, PREtec product adoption is poised for a
significant step up from distributors and end customers. Accordingly, the
Board is confident that order intake will increase once our customers have
corrected their inventory levels.

 

Jeff Tweedy, Chief Executive Officer, commented:

 

"Sales of Plant Health Care products experienced significant growth in all
regions with the exception of the US market. Deteriorating market conditions
driven by distributor destocking of channel inventories impacted PHC sales in
the US. Registration delays have impacted our 2024 outlook; however, we remain
positive on the revenue growth opportunities for our technology. PHC now
markets PREtec on three continents and we anticipate the launch of Teikko in
Brazil during the 2024/2025 growing season."

 

For further information, please contact:

 

 Plant Health Care plc                                   Tel: +1 919 926 1600
 Jeff Tweedy, CEO

 Cavendish Capital Markets Limited - Nomad & Broker      Tel: +44 (0) 131 220 9771
 Neil McDonald / Peter Lynch

 

About Plant Health Care

Plant Health Care offers products to improve the health, vigour and yield of
major field crops such as corn, soybeans, potatoes, and rice, as well as
specialty crops such as fruits and vegetables. We operate globally through
subsidiaries, distributors and supply agreements with major industry partners.
Our innovative, patent-protected biological products help growers to protect
their crops from stress and diseases, and to produce higher quality fruit and
vegetables, with a favourable environmental profile.

 

Find out more at www.planthealthcare.com (http://www.planthealthcare.com/)

 

This announcement contains inside information as stipulated under the UK
version of the Market Abuse Regulation No 596/2014 which is part of English
Law by virtue of the European (Withdrawal) Act 2018, as amended.

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