Agriculture biological products company Plant Health Care said in a trading update on Tuesday that it was expecting revenue to have grown 28% in 2021, to $8.4m, with a 24% increase in constant currency terms.
The AIM-traded firm said its gross margin expanded 300 basis points for the 12 months ended 31 December to 59%, while its commercial business increased its EBITDA and was cash positive for the period.
It invested $3.7m during the year, up from $2.7m in 2020, as its ‘PREtec’ product ramped up for commercial launches.
Plant Health Care said it saw a “substantial” improvement in working capital, adding that cash and cash equivalents at year-end on 31 December totalled $9.2m.
Post year-end, the company said it had seen continued growth into 2022, as it ramped up scale by building key distributor relationships on a global basis.
It said Saori was expected to be a “significant driver” of growth, having the potential to deliver disease control and yield increase worth around $75 per hectare for soybean growers in Brazil.
That would give growers a return on investment of at least six times, while reducing the use of “potentially less safe” agrochemicals.
Brazilian soybean farmers reportedly spent $2.85bn on disease control in the 2020-2021 season.
Plant Health Care’s board said it was confident that the company was on track to deliver cash break even within its existing financial resources.
“The commercial business is now profitable and cash generative and set to deliver profitable growth over the coming years,” said chief executive officer Chris Richards.
“Strong Harpin aB revenue growth, combined with the first of many product launches from the PREtec platform, mark a very strong year for Plant Health Care.
“The company is now well positioned to become a leader in sustainable agriculture, as recognised by the award of the LSE’s Green Economy Mark.”
Richards said the firm had established core relationships with four of the largest global agricultural distributors, giving it scale in key markets.
He noted that Harpin aB sales growth of 55% was driven by “substantial increases” in all regions, adding that in Mexico, sales of the product increased by 15%, while third-party product sales were held back due to low crop production in the first half of 2021.
“The launch of Saori into Brazil, the world’s largest soybean market, has been well received.
“Sales volumes in 2021 were limited by the availability of product; however, the recently announced toll manufacturing agreement secures ample capacity to supply long-term growth in PHC279 – the active ingredient in Saori – at attractive cost for all global sales.
“Nutrien, our partner in Brazil, is excited about the potential for ramping up sales of Saori in 2022 and beyond.”
Plant Health Care was planning multiple launches of PREtec products into other large markets over the coming years, Chris Richards said, following an investment of more than $25m over the last eight years.
“The next launch will be PHC279 for the specialty crop market in the United States, in partnership with Wilbur Ellis, in the second half of this year.
“The submission of the regulatory filing for PHC949 to the EPA in the US sets the way for the first launch of that exciting product in 2023.
“Plans are in place for further major product launches in following years, as we build a large business from the PREtec platform.”
The company had “good visibility” to future revenue growth expectations from its distributors, Richards said, and was confident that the momentum within the business would continue into 2022 and beyond.
“We remain on track to deliver cash break even within existing resources.”
At 1435 GMT, shares in Plant Health Care were up 1.08% at 9.4p.
