Plant Health Care (PHC ) said the market for sustainable agriculture is growing at more than 12% per annum - and that it is aiming to grow faster than that market in 2022 and beyond.
Management Update
This morning's results were also complemented by an announcement that the company’s Chief Operating Officer Jeff Tweedy will replace Chris Richards as Chief Executive from 22 June 2022. Following the move, Mr. Richards will assume the position of Non-Executive Chairman.
Speaking of Tweedy's appointment, the group said: "He is the perfect person to lead the company into its exciting next phase of growth. It will be an honour to support Jeff in his new role, where I have no doubt that his energy, commitment and professionalism will deliver continued success for Plant Health Care over the coming years."
Today, Richard Webb, Chairman of Plant Health Care, told investors that the business, which provides patent-protected biological products to global agriculture markets, has delivered strong results for the year ended 31 December 2021 and ahead of market expectations.
FY21 Results
In FY21, revenue grew by 28% to $8.4m, up from $6.6m in 2020 while the company’s proprietary product revenue increased $2.2m or 58% to $6.1m, up from $3.9m in FY20. Harpin αβ sales were up 55%, lifting overall sales growth to 28% (24% in constant currency).
Pre-tax loss for the year came in at $6.4m compared with $3.3m in 2020 while the company’s operating loss also widened, to $6.4m from $3.6m in the previous year amid higher costs.
The Commercial business was EBITDA and cash positive for the second straight year with on-ground sales strong in Brazil and the US which increased 48% and 85%, respectively.
As at 31 December 2021 and 2020, investments and cash and cash equivalents were $9.2 million and $4.1 million respectively, with cash remaining a primary focus for the business. In March 2021, the company received improved funding following its fundraise of $9.1m.
As a result, the Company was able to increase its investment in PREtec product launches in 2021, raising the rate of cash burn to $4.1m. At the end of 2021, its cash reserves were $9.2m. The Company said it is confident that it will reach profit within these cash reserves.
The company invested $3.0 million over the period in the PREtec platform, focused on obtaining registrations and refining manufacturing costs to support its plan for at least one major product launch every year, starting with the launch of Saori™ in Brazil in 2021.
Dr Christopher Richards, Chief Executive Officer of Plant Health Care, said the Company’s encouraging performance in 2021 demonstrated the strength of its competitive position.
During the year, the company launched Saori™, its first product from the PREtec platform, in which it has invested more than $25 million over the last eight years. Mid-term sales of Saori™ are now expected to exceed the entire current revenue of Plant Health Care now, and the company said it plans to follow that with at least one major product launch every year.
Plant Health Care said its suite of distribution partners was widened over the period to include Nutrien, the world’s largest agriculture retailer, in Brazil and market leader Agrii in the UK.
It now has partnerships with four of the world’s largest distributors of agriculture inputs; in total, it has access to some 52 million hectares of crops, with a $5bn set of opportunities. Its three largest customers for Harpin αβ each bought more than $1 million worth in 2021.
In FY21, sales of Harpin αβ in the USA reached $2.8 million, as in-market sales into corn and specialty crops (fruits and vegetables) accelerated. In-market sales into specialty crops since 2019 have grown at 116% CAGR and the company anticipates continued growth at this level.
In Brazil, Harpin αβ sales reached $1.0 million; in-market sales into sugar cane have grown at a 103% CAGR since 2019 while sales in the Europe/Africa/Asia region reached $1.6 million.
Plant Health Care has set out ambitious plans for organic growth, with revenue exceeding $30m in 2025. By that time, it expects to be generating strong profit and cash flows, it said.
“As we roll out PREtec products, we anticipate that sales growth in 2022 and beyond will be even faster than in 2021.
Strengthening our position in Europe, the world’s largest market for sustainable agriculture, is an important element in our strategy,” the company told investors.
Today, Plant Health Care has also announced that the company’s Chief Operating Officer Jeff Tweedy will replace Chris Richards as Chief Executive officer from next month on 22 June 2022 and that Mr. Richards will then be assuming the position of Non-Executive Chairman.
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Plant Health Care’s mission is to tap into the global market for biological products, a market which is growing at 12% per annum and is projected to be a $19 billion market by 2026.
Since 2018, the company has evolved its strategy from a focus on licensing its technology to major suppliers of agrochemicals, towards working with distributors. It is convinced that the company’s distributor partners will drive the adoption of its technologies over the coming years, to the benefit of the farming industry as it seeks to adopt more sustainable practices.
The Company’s latest agreement will see it distribute the Harpin αβ bio-stimulant product, ProAct®, into Argentina andUruguay, respectively, to further drive its commercial sales.
Ager Agro SAS (“Ager”), which supplied products to 10 million total treated hectares of crops in Argentina in 2021, was recently appointed as the group’s distributor across both markets.
Over 16 million hectares of soybeans were planted in Argentina in 2021. Furthermore, farmers are under increasing pressure to move to more environmentally and biologically friendly products to improve the sustainability of production, the company acknowledges.
In 2022, Plant Health Care’s commercial business is both profitable and cash generative, The Company said it expects this to deliver profitable growth for the business “in the years ahead.”
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