Plant Health Regulatory News (PHC)

PLANT HEALTH CARE plc

("Plant Health Care" or the "Company")

Trading update

Plant Health Care® (AIM: PHC.L), a leading provider of novel patent-protected biological products to global agriculture markets, is announcing an update on trading and the outlook for the full year to 31 December 2023 ("FY23").

Highlights

· Market conditions in the wider agriculture market have diminished over the course of the year, particularly in the recent months;

· Due to these challenging market conditions, particularly in the key USA end market, the Company now anticipates revenue in FY2023 to be in line with or show modest growth over the year ended 31 December 2022 ("FY22"); 

· The Company continues to make significant progress in obtaining new product registrations and widening geographic distribution, positioning the Company well for growth in 2024 and beyond;

· Trading in Brazil, Mexico and Europe broadly in line with market expectations.

As highlighted at the time of the Company's interim results in September 2023, market conditions for traditional agriculture input businesses were extremely challenging in the first half of the year, and the environment has continued to deteriorate over recent months. This has been particularly evident in the US; however, global markets, including Brazil, Europe and some Asian markets, have also been subdued, leading a number of companies across the sector to revise guidance on current year performance.

Pleasingly, Plant Health Care's trading in Brazil, Mexico and Europe has been broadly in line with market expectations in the second half of the year, in spite of these challenging market conditions. However, sales orders in the US have not materialised as originally anticipated as the Company's distribution partners in the region have gone through a significant inventory correction. This has, in large part, been driven by volatility in demand and price following the global COVID-19 pandemic, as well as the effects of an increasing interest rate environment and change in growers purchasing habits. Distributors are shifting demand from Q4 FY23 into H1 FY24 and are planning to manage lower levels of inventory for FY24. While inventories of the Company's products with distributors are not high, it is not immune to this structural change. In addition, regulatory delays in India and a number of other countries have resulted in delays to some product launches; whilst this is expected to have a limited impact on the Company in FY23, this is likely to affect performance more materially in FY24.

Accordingly, the Board now anticipates revenue for FY23 to show flat to modest growth over FY22, with the final result dependent on the timing of expected orders. Revenue in FY24 is now anticipated to be approximately 28% lower than market expectations of $23m, due to lower levels of inventory being maintained by the Company's distributors and regulatory delays in some territories. The Board intends to review operating expenses accordingly.

Against this backdrop, the pace of new product registrations and the widening of distribution partnerships into new geographies continues. Sales of Harpin£ are increasing in all of the Company's core markets, excluding the US market. Critically, the first products from the new PREtec platform are being well received in the market, with successful product launches across three continents. Although there are some delays to product launches, the growth trajectory is clear for the medium term. After more than 10 years and an investment in excess of $30m, PREtec product adoption is poised for a significant step up from distributors and end customers. Accordingly, the Board is confident that order intake will increase once our customers have corrected their inventory levels.

Jeff Tweedy, Chief Executive Officer, commented:

"Sales of Plant Health Care products experienced significant growth in all regions with the exception of the US market. Deteriorating market conditions driven by distributor destocking of channel inventories impacted PHC sales in the US. Registration delays have impacted our 2024 outlook; however, we remain positive on the revenue growth opportunities for our technology. PHC now markets PREtec on three continents and we anticipate the launch of Teikko in Brazil during the 2024/2025 growing season."

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About Plant Health Care

Plant Health Care offers products to improve the health, vigour and yield of major field crops such as corn, soybeans, potatoes, and rice, as well as specialty crops such as fruits and vegetables. We operate globally through subsidiaries, distributors and supply agreements with major industry partners. Our innovative, patent-protected biological products help growers to protect their crops from stress and diseases, and to produce higher quality fruit and vegetables, with a favourable environmental profile.

Find out more at www.planthealthcare.com

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended.