Plant Impact revenue surges as shipments of Veritas rise

Crop enhancement research and development company Plant Impact published a trading update for the nine months to 30 April on Monday, with revenue for the period up 55% on the same time last year to £7.3m.

The AIM-traded firm said that, on a constant currency basis, year-to-date revenue increased around 30% compared with the same period last year as the group benefitted from the relative weakness of sterling.

As explained by the board at the time of its interim results, much of the underlying year-to-date growth had come from increased shipments of the company’s flagship soybean product Veritas to Brazil for the 2016/17 growing season.

Third quarter revenue of £2.4m - up from £0.5m year-on-year - included the final shipments of Veritas product for that growing season, particularly timed for later stage soybean and dry bean crops.

Revenue in the third quarter for other parts of the world was modest, as expected, but consistent with the board’s full year business plans.

The cash balance at 30 April was £3.7m, down from £6.0m at the end of January, with the outflow reflecting that payment for third quarter shipments was not received until after the period end.

Plant Impact said the balance at 31 May was £5.0m.

“The group's business plans for fourth quarter trading, set at the start of the year, included an expectation of revenue from early shipments of Veritas for the 2017/18 Brazil season,” the company’s board noted in its statement.

“Usage of Veritas by Brazilian growers in the field over the course of the 2016/17 growing season was significantly up on the prior year and in-field technical performance of the product has been strong.

“However, challenging industry-wide trading conditions in the country have meant that end of season inventory levels of agricultural chemical products in Brazil, including Veritas, are higher than expected.”

In order to preserve their exclusive rights to market Veritas in Brazil, Bayer Cropscience were required to purchase annual minimum contractual volumes of product.

The group said it was in discussions about how they would meet those commitments, including exploring contractual amendments which would enable higher volume product strategies and integrated commercial offers to growers.

The outcome of those discussions could impact the full year results and expectations for growth in the next financial year, the board cautioned, adding it would update the market with further announcements as appropriate.

“Fourth quarter trading in other products and geographies is progressing well and is expected to be at least in line with the board's expectations which were for material growth compared with the minimal revenue achieved in the same period last year.

“In particular, this fourth quarter will see the first season revenue for Fortalis in the US, further sales of Banzai into West Africa and the usual northern hemisphere revenues for traditional fruit and vegetable products.”

With regard to research and development, the soybean development portfolio benefited from another season of work in Brazil with one new product having reached the end of its development stage, the board reported.

“This provides the potential for first sales in the next crop cycle in Brazil.

“Field results from first customers and trial growers using Fortalis in Argentina were also good, with the product delivering a 4% yield uplift over what were excellent seasonal yields in that market.

“Post-season customer feedback has also been positive, and the Group is now in commercial planning for the coming 2017/18 growing season.”