Strong second half of 2023 expected to drive material revenue growth

Plant Health Care® (AIM: PHC.L), a leading provider of novel patent-protected biological products to global agriculture markets, announces its unaudited interim results for the six months ended 30 June 2023 (“H1 2023”).

Financial Highlights:

• Overall revenue increased 1% to $5.6 million (H1 2022: $5.5 million)
• Revenue in Brazil was up 48%, driven by in-market demand for H2Copla® (up 29% on-ground) and Saori® (up 38%). Revenue in Mexico was up 12%, while sales in Europe were flat.
• In the US, distributors delayed purchases of all agricultural inputs in H1 2023 to drive down inventories in a negative market. Accordingly, US sales were down 56% in the period, resulting in low inventories in the channel, pointing to strong sales in H2 2023. Customer on-ground sales in the field grew strongly, with Employ® up 35% and FASTAND up 9%.
• Cash used in operations increased 33% to $2.8 million (H1 2022: $2.1 million) due to higher trade receivables and lower accounts payable offset by inventory improvement. The Group’s cash burn is typically significantly higher in the first half than in the second half.
• In June 2023, the Group raised $3.3 million (net of expenses). Cash as at 30 June 2023 was $5.7 million (2022: $6.3 million).

Operational Highlights:

Distributor agreements

• Signed exclusive distribution agreement with Novozymes to launch Harpinαβ in Indian sugar cane production. First commercial sales are expected once registration is achieved, expected in H1 2024.
• Following the registration of PHC279 in the USA earlier this year, a distribution agreement was concluded with Wilbur Ellis® Agribusiness. OBRONA® was launched in June of 2023 as a foliar fungicide for fruits, nuts, vegetables, and row crops. The Company is now selling PREtec products on three continents.

New product registrations

• A new PREtec product PHC68949 for the control of soil nematodes received the first regulatory approvals for commercial use in Brazil. Full registration is expected in late 2023 or early 2024, ahead of launch into soybeans in 2024. The Group expects to introduce PHC68949 to other crops in Brazil subsequently.
• Achieved three significant country registrations for Harpinαβ in Europe (Poland, France and Cyprus); plans are advancing for product launches in these geographies, anticipated in 2024.

Outlook:

• Strong second half of 2023 expected with material revenue growth anticipated, resulting in revenue for the year in line with market expectations.
• On track to achieve revenue of $30 million by 2025 through continued growth in Harpinαβ and the launch of new peptides, supported by current and new distributor relationships. This will deliver a fast-growing, profitable and cash generative business.

Jeff Tweedy, CEO, Plant Health Care, commented:

“Market conditions in H1 2023 have been very challenging for traditional agricultural input businesses, with most large companies reporting significant reduction in revenue. The US has been particularly difficult, with all distributors sharply reducing inventory to reduce the impact of price volatility and slow demand. Most of the agribusiness companies saw significant revenue decline in the first half of 2023 as compared to last year.

In that context, growth outside the US allowed the Group to grow revenue marginally; importantly, profit margins were maintained. Strong on ground sales growth in our core markets gives us confidence in robust revenue growth in H2.

The Group’s first-half performance was driven by the growing demand for Harpin𝜶β and Saori in Brazil. The Brazilian market for Saori is significant, with potential for $10 million in revenue. We expect a strong second half revenue performance, which will underpin the Group’s target to deliver $30 million in revenue in 2025.

The Group continues to register new products. We received the first PREtec approval from the US EPA with the product being marketed under the brand name OBRONA. With the launch of PREzym® and OBRONA we now market PREtec on three continents, which is a significant accomplishment. We plan to launch new PREtec products for the next three years. Our strategy of expanding relationships with major global distribution partners is on track.

During the first half of the year, we signed a new agreement with Novozymes in India and a new commercial agreement for OBRONA with Wilbur-Ellis.

There continues to be strong demand and interest in our products. The world has an ever-increasing need for more food with sustainable agriculture at the heart of meeting this need. Farmers face many challenges, including the impacts of climate change such as drought, to ensure food security. Plant Health Care helps farmers solve these problems. Our biological products produce better quality crops and deliver higher yield, and we are well placed to benefit as the need for our products increases.”

News in full

An overview of the Plant Health Care and it’s technologies is provided in the video below