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Dow AgroSciences NZ FY sales jump 23 percent on Australian growth, loss widens

Monday 24th June 2013

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Dow AgroSciences (New Zealand), the local unit of Dow Chemical Co, reported full-year sales growth of more than a fifth as it sold more crop protection products in Australia, though costs to ramp up production widened its annual loss.

Sales rose to $146.9 million in calendar 2012, from $119 million a year earlier, according to the New Plymouth-based company's annual report. The net loss widened to $1.87 million from $742,000.

The manufacturer of herbicides, pesticides and fungicides, which began life as Ivon Watkins in 1944 and became Dow AgroSciences in 1998 when Dow took full control, says it has begun 2013 with the best pipeline of new products it has had for many years. Costs rose last year as the company expanded its main New Zealand plant and recognised a foreign exchange loss.

"What you're seeing in terms of growth of our business is in exports and expansion in Australia," said Peter Dryden, managing director of Dow's local unit. In New Zealand, 2012 "was not too dissimilar to the previous year," though with the effects of drought showing up late in the year, he said.

Costs of raw materials and consumables climbed 16 percent to $133 million. Employee costs rose 15 percent to $8.5 million. Other expenses jumped to $2.8 million from $997,000 as its foreign exchange loss rose to $1.6 million from $416,000.

"A big impact for us is in our expansion here, with labour costs going up substantially," Dryden said.

Currently, the company detects "a sense of optimism" in the New Zealand market, with some variation between sectors, he said. "The recovery from drought, while it will persist, has still been quite remarkable."

Midland, Michigan-based Dow Chemical, the biggest US chemical company by sales, beat profit estimates in its first quarter as sales fell 23.3 percent to US$14.4 billion.

The shares last traded at US$32.63 and have edged up 1.2 percent in the past 12 months. The stock is rated a 'hold' based on 21 analysts polled by Reuters, with a median price target of US$35.50.

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