Makhteshim Agan

The stock was sold following poor results, together with the announcement that they were about to enter the generic seed market. The disappointing numbers were due to weakness in generic round up (i.e. herbicides). In the meantime, the planned investment in generic seeds does not fill us with confidence given we see little logic in moving into that market segment, viewing the move more out of a sense of desperation.

Makhteshim Agan Industries is a world leader in crop protection. 75% of revenues come from herbicides and insecticides. The company had a bad experience in Brazil in 2006 when a crop failure led to increased bankruptcies from small farmers, leading to bad debts, lower profits and a large increase in working capital. This now seems to be well and truly behind them. The interim results show booming sales and an increase in margins - trends which should continue.