MIRA
INFORM REPORT
|
Report Date : |
23.08.2007 |
IDENTIFICATION DETAILS
|
Name : |
MAKHTESHIM CHEMICAL WORKS LTD. |
|
|
|
|
Registered Office : |
|
|
|
|
|
Country : |
|
|
|
|
|
Date of Incorporation : |
17.7.1952 |
|
|
|
|
Legal Form : |
Public Limited Liability Company |
|
|
|
|
Line of Business : |
Developers,
manufacturers and marketers of crop protection products - pesticides, insecticides,
herbicides, polyester resins, photo-chemicals, etc. |
RATING & COMMENTS
|
MIRA’s Rating : |
A |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
Status : |
Good |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Clear |
name & address
MAKHTESHIM
CHEMICAL WORKS LTD.
Industrial Zone
BEER SHEVA 84244
Telephone 972
8 629 66 11
Fax 972
8 629 69 91
HISTORY
A public limited liability company incorporated as per file No. 52-002396-1
on 17.7.1952.
In May 1992 published a prospectus offering shares to the public and
started trading through the Tel Aviv Stock Exchange.
Subject amalgamated with Agan
Chemical Manufacturers LTD in June 1998.
As of May 1998, due to change of ownership, subject is no longer traded
on the Tel Aviv Stock Exchange.
SHARE CAPITAL
Authorized share capital
SHAREHOLDERS
Company is fully
owned by MAKHTESHIM – AGAN INDUSTRIES LTD. (hereinafter M.A.), a subsidiary of
KOOR INDUSTRIES LTD., both public limited liability companies, whose shares are
traded on the Tel Aviv Stock Exchange KOOR is also traded on the Nasdaq Stock
Exchange and is part of the I.D.B concern, controlled by Nochi Dankner.
DIRECTORS
1.
Avraham Biger, Chairman and of the MAKHTESHIM AGAN
Group,
2. Shlomo
Yanai,
3.
4. Michael
Pikarsky,
5. Zvi
Zur,
6. Shlomo
Yuness,
7. Danni
Porat,
8. Eli
Asraf,
9. Avraham
Kleiner.
GENERAL MANAGER
David Nir
(replaced Ehud Marom theses days).
BUSINESS
Developers,
manufacturers and marketers of crop protection products - pesticides,
insecticides, herbicides, polyester resins, photo-chemicals, etc.
Subject is
Over 90% of
subject’s products are exports to over 100 countries, through subsidiaries and
distribution branches worldwide.
Among local
clients: HAMASHBIR FOR AGRICULTURAL, CHEMADA FINE CHEMICALS CO.
Among local
suppliers: DOLM PELSHAR, MODCHEM, GOLD BAR, SANO INTERTRANS, ATEKA, PETRUS
TECHNICAL SUPPLIES, etc.
Sole pesticides
sub-contractor for BAYER - of
Raw materials purchase agreement with DOW CHEMICALS -
of
Also manufacturing for a/m resins under the brand name DERKANE.
Subject also has cooperation agreements with CRAY VALLEY of France, and
MONSANTO.
Operating from rented M. A. Group headquarters offices in 1 Azrieli
Center, Tel Aviv.
Note: Headquarters are moving to the new offices in
Production from main plant in Hebron Road, Industrial Zone, Beer Sheva (leasehold
by parent company, on 407,000 sq. meters plot of which 40,000 sq. meters
built), and a plant on an area of 110,000 sq. meters in Ramat Hovav.
M. A. Group also operates from 2 plants in
Distribution through 23 marketing companies and offices worldwide.
Having in all some
3,184 employees serving the whole M.A. Group.
MEANS
Parent company,
M.A. current market value US$ 2.536 billion.
During the 2nd
half of
Financial data is included in the consolidated financial statements of
parent company, MAKHTESHIM – AGAN INDUSTRIES LTD., which shows:
US$
(thousands)
30.06.2006 31.12.2006
ASSETS
Current assets
Cash
and cash equivalents 426,590 324,362
Short
term investments 46,004 1,706
Trade
receivables 547,177 486,368
Other
receivables 99,050 106,372
Inventory __598,313 __607,328
1,717,134 1,526,136
Investments, loans
and long term debentures 75,826 48,621
Fixed assets (net) 510,422 511,410
Other assets and deferred expenses (net) __547,552 __532,755
2,850,934 2,618,922
======== ========
LIABILITIES
Current
liabilities 833,286 752,892
Long term liabilities 716,074 704,100
Minority rights 35,958 30,212
Equity 1,265,616 1,131,718
2,850,934 2,618,922
======== ========
Subject is an “Approved
Enterprise” and as such entitled for State support and tax relief.
On February1997
subject received approval from the Israeli Investment Centre for an expansion
plan for its Ramat Hovav plant (estimated at US$ 60 million).
In October 1998 subject’s
investment plan of US$ 4.2 million for its plant in Ramat Hovav was approved by
the Investment Centre Authorities.
In April 2000 the
In December 2001,
subject received an additional investment plan for further expansion of its
Ramat Hovav plant (US$ 14.8 million).
There are 7 charges for unlimited amounts registered on the company's
assets in favor of the State of Israel and a foreign company.
ANNUAL SALES
Subject ended 2003
with a net profit of
Subject ended 2004 with a net profit of US$ 77,840,000 (consolidated).
Subject ended 2005 with a net profit of US$ 139,232,000 (consolidated).
Subject ended 2006 with a net profit of US$ 47,371,000 (consolidated).
MAKHTESHIM-AGAN INDUSTRIES LTD.
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31.12
2004 2005 2006
Sales 1,539,702 1,740,717 1,778,756
Gross profit 595,794 681,002 606,739
Operating income 289,187 331,071 203,794
Pre-tax income 218,881 252,286 84,909
Net income 165,527 205,493 83,919
======= ======= =======
M.A. consolidated sales for the first half of
2007 were US$ 1,109,225,000 (16.5% increase comparing to the parallel period of
2006), making a gross profit of
OTHER COMPANIES
PRIZMA INDUSTRIES
LTD., 100% subsidiary.
CELSIUS PROPERTY
B.V., 100% subsidiary.
M.A. INDUSTRIES
LTD. also owns (all fully owned unless otherwise stated):
AGAN CHEMICAL
MANUFACTURERS LTD., which together with subject is responsible for the Group's
main activities. Manufacturers, exporters and marketers of chemicals for
agricultural purposes, i.e. plant growth regulators, plant protection
chemicals, herbicides, etc.
AGAN MARKETING
CHEMICALS LTD.
AGAN AROMA &
FINE CHEMICALS LTD., developers, manufacturers, marketers and exporters of
aroma substances for detergents
AGAN ENGINEERING
ENTERPRISES (1988) LTD.
LYCORED LTD., 98%,
holds 100% of LYCORED BIO LTD., jointly leading the non-agro activities
(e.g. natural food additives, micro encapsulation of
natural health materials) of the MAKHTESHIM-AGAN Group.
DALIDAR PHARMA
MAKHTESHIM AGAN
HEALTH AND FOOD ADDITIVES LTD.
MAB PARTICIPACOES
S/C LTD.
MILENIA
PARTICIPACOES
MAGAN ARGENTINA
S.A.,
ARAGONESAS AGRO
S.A.,
IRVITA PLANT
PROTECTION N.V.
QUENA CORP.
FAHRENHEIT
HOLDINGS B.V.,
MAKHTESHIM AGAN
HOLDING B.V.
MAKHTESHIM AGAN
HUNARIA KFT
MAKHTESHIM AGAN
COSTA RICA SA
MAKHTESHIM AGAN
ESPANA SA
MAKHTESHIM AGAN
NORTH AMERICA INC
MAKHTESHIM AGAN
MAKHTESHIM AGAN
U.K. LTD
MAKHTESHIM AGAN
MAKHTESHIM AGAN
THILAND LTD
MAKHTESHIM AGAN ITALIA
SRL
MAKHTESHIM AGAN
SOUTH AFRICA PTY LTD.
MAKHTESHIM AGAN
INDIA PRIVATE LTD.
MAKHTESHIM AGAN
MAKHTESHIM AGAN
MAKHTESHIM AGAN
PORTUGAL LTD.
BIOTECH M.A.H.,
50%, jointly with HAZERA, investing in biotech start-ups
PROFICOL
MAGAN JAPAN CO.
LTD.
MAGAN HB B.V.
MAGAN ITALIA SRL
MAGAN HOLDING
MAGAN KOREA CO.
LTD.
AGAN ENGINEERING
ENTERPRISES (1988) LTD.
ALB HOLDINGS
FEINCHEMIE
SCHWEBDA GMBH
MA U.S. HOLDING
INC.,
AGRONICA
AUSTRALASIA PTY LTD. and FARMOZ PTY LTD.,
And several more
subsidiaries.
BANKERS
Known to all local
banks, working mainly with Bank Leumi LeIsrael Ltd., Beer Sheva Branch (No.
921), Beer Sheva.
CHARACTER AND
REPUTATION
The M.A. Group
suffered from a bad year (2006) in the world agro-chemical field, which was a
major reason to the losses on the 4th quarter of 2006. That, and the
entrance of a new general manager to the Group (Avraham Biger, Chairman and
General Manager of the M.A. Group since the end of 2006), led to a strategic
plan issued in March 2007, advised by consulting firm McKinsey, which includes
organization structural changes (unifying the operations of subject and AGAN
CHEMICAL MANUFACTURERS LTD.), streamlining measures and sales promotion.
In this context,
on 15.3.2007 subject's Workers' Union (represents part of subject's workers)
declared a strike in the Beer Sheva plant, due to the management intention to
lay off employees as part of the streamlining program, and also concerning
salaries agreements. Negotiations with management are being held.
M.A. also begins
to move its headquarters from Tel Aviv to new offices in
On 13.8.2007 a
blast in one of subject's reactors in the Ramat Hovav facility occurred (1 out
of 8 reactors), causing some minor casualties and an interruption in the
relevant line of production. Subject announced that the damage is being fixed,
the reasons for the explosion are being invested and that there will be no
significant influence on the company's activities or profitability.
Apart from the
above, nothing unfavorable learned.
MAKHTESHIM AGAN is
considered the world’s largest producer of generic products for plant
conservation and one of the leading companies in the agro-chemical sector,
ranked 7th in world sales in the agro-chemical field (in 2004 and
2005) with 4.3% of global sales.
In August 1999 it
was reported in the American press that the EPA (U.S. Environment Protection
Agency) has stiffened the restrictions on MAKHTESHIM’s most important insecticides
due to “Green Lobby” pressure.
In August
In April 2000
subject signed a cooperation agreement with French company
In October 2001
the Israeli Standards Institute credited subject with the golden mark. Subject
is also T.I. 18000, ISO 14001, ISO 9002, green mark and standard mark
certified.
In October 2001
subject received an initial approval to market the NOVALURON pesticide in the
In October 2002,
parent acquired several products (including stock, licenses, distribution
rights, etc.) from BAYER, for a sum of €155 million. Product annual sales are
some €80 million.
In November 2002,
parent acquired an additional product package from BAYER, for a sum of €52
million. The acquired products annual sales are some €36 million.
In April 2004,
subject acquired 3 Agro-chemical American Companies of the FARM SAVER Group,
for a total sum of US$ 60 million.
In June 2004, it
was reported that the M.A. Group acquired 45% in CONTROL SOLUTIONS INC. (CSI),
an American pesticide company, for a sum of US$ 13.5 million. In August 2005,
it was reported that it acquired further 15% in CSI. CSI's sales in 2003
amounted to US$ 45 million.
In July 2004,
parent acquired FARMOZ,
In September 2004,
subject's parent acquired 50.1% of RICECO of the
In March 2005,
subject's parent acquired 49% of Dutch company MABENO in a shares swap deal
(with an option to increase stakes up to 55%).
In May 2005,
subject's parent acquired 70% of Hungarian distribution company BIOMARK
TRADING, with an option to increase stakes up to 100%.
In April
In the framework
of its expansion program in the non-agricultural pesticide products, subject's
parent M.A. acquired in 2006 shares in 2 foreign companies (30% of ALLIGARE of
the USA, and 60% of Italian KOLLANT).
In November
The 4th
quarter of 2006 results includes allocation of US$ 10 million for settling a
lawsuit in the
In February 2007
it was reported that the whole M.A. Group will purchase raw materials from
Subject is part of
the I.D.B. Group, one of
During the first
half of 2006 businessman Nochi Dankner, who controls the I.D.B. Group,
increased his stake in KOOR INDUSTRIES LTD. (which controls subject's parent
M.A. with 37%) from 10% to 44%, thus becoming the main shareholder of KOOR. He
acquired the shares from the Bronfman Group. The M.A. Group is considered as a
strategic asset of the I.D.B.
In December 2006
I.D.B. increased its holdings in KOOR to 52%.
In March 2007, it
was reported that the M.A. Group intended to acquire American major pesticides
manufacturer ALBAUGH, with annual sales of US$500 million, however backed off
after the asked price (US$750 million) was too high.
Earlier, it was
also reported about a possible strategic move in the global agro-chemical
market, where M.A.'s activities will be combined with the agro-chemical
activities of DU PONT or DOW CHEMIVCALS.
In April 2007
parent M.A. announced it is negotiating with the owners of a foreign company
(where they so far have no significant presence) the possibility to acquire
control in the foreign company, which deals in the area of plant protection
products manufacturing and marketing. The target company has annual turnover of
less than US$ 100 million, however the negations are still in a very early
stages.
In August 2007 an
Australian newspaper published that M.A. is one of the 3 contenders for the
acquisition of Australian giant generic pesticides manufacturer NUFARM,
according to a company value of US$ 2.4 million.
NUFARM is
considered the 2nd largest generic pesticides manufacturer in the
world, specializing in pant protection products.
M.A. denied the
publications.
According to the
Chairman of the Chemical, Pharmaceutical and Environment Division at the
Industrialists Association, total sales of the branches in 2006 witnessed a
remarkable 12.6% growth to US$ 17.4 billon, after in 2005 sales increased by
10% from 2004.
2006 exports of
the branch were US$ 8.8 billion (some one third attributed to the chemical
industry), a 15.7% increase from 2005, and sales to the local market reached
US$ 8.6 billion, a 10% increase from 2005.
The chemical and
pharmaceutical industries are the 2nd largest export branch (after
the hi-tech) and comprise 30% of
Purchasing abroad amounted to US$ 1.5 billion in 2006.
SUMMARY
Good for trade engagements.
Maximum
unsecured credit recommended several millions of US$.
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)