Objectives and strategy
 |
|
It is the overall strategic objective of Auriga to ensure positive, long-term value creation for the benefit of the company's shareholders, customers, employees and other stakeholders.
The value creation builds on the continued development and growth from new products.
Efficiency improvements, cost control and improvements in working capital are to contribute further to increasing earnings and value creation in the coming years.
|
Cheminova creates value for farmers worldwide by developing and marketing crop protection products which contribute to increasing yields and the quality of crops for farmers. The value creation is based on Cheminova's core competencies within identification, development, registration, production and marketing of a number of new, unique products which at the same time contribute to a significantly more balanced and differentiated product portfolio.
Over the past three years, a major transformation of the product portfolio has been accomplished, leading to growth of more than DKK 1 billion in sales of new products, corresponding to an average annual growth rate of more than 20%. New products thus accounted for more than 60% of revenue in 2010. During the same period, sales of glyphosate declined by approx. DKK 1 billion, accounting for 15% of revenue in 2010 against 33% in 2008. The transformation of the product portfolio is expected to be completed in 2011, after which glyphosate is expected to stabilise at a share of 10% of revenue.
| EARNINGS AND VALUE CREATION
The objective is to improve earnings every year so the operating result (EBITDA) after 2013 reach the level of 13-18% depending on the market conditions in individual years. The value creation (ROIC) is to be improved every year to a level of about 15% after 2013.
The combination of improved earnings and increased value creation makes it possible to reduce the debt burden (NIBD/EBITDA), finance growth and investments and complete the acquisitions which may prove possible during this period. The obejctives are to be reached through results in three strategic focus areas.
|
|
 |
| |
|
|
| DEVELOPMENT AND GROWTH
Based on a differentiated product portfolio and a strong development pipeline, Cheminova will be able to generate annual organic growth of more than 10% from new products.
After completion of the transformation of the product portfolio in 2011, the development is expected to result in an average annual growth rate of approx. 10% is expected in future, which will take Cheminova's revenue to about DKK 8 billion after 2013. Added to this comes growth from possible acquisitions as Cheminova will continue to pursue opportunities for strengthening its product portfolio and market access through acquisitions.
|
|
 |
| The transformation of the product portfolio and the continued growth from new, differentiated products will lead to a continuous strengthening of the product portfolio allowing for improved contribution ratios and improved earnings. |
| |
|
|
| EFFICIENCY IMPROVEMENTS AND COST CONTROL
Significant improvements in operations at the Danish production plants have been achieved in recent years through working with LEAN. Most recently, in early 2011 global capacity adjustments, primarily within the company's other functions, have been made which will reduce costs by approx. DKK 75 million a year from 2012.
The efforts to streamline operations will continue in the coming years. Moreover, strict cost control will contribute to improving earnings.
|
|
 |
| |
|
|
| WORKING CAPITAL AND DEBT BURDEN
Like other companies in the industry, Cheminova is characterised by a relatively high level of working capital. This is partly due to the need to help finance agricultural production in some countries, and partly for capital-intensive production facilities catering for a short season of use. However, reducing the level of working capital in the coming years is decisive to financing future development and growth. This will improve cash flows and reduce the debt burden.
The aim is to reduce the average working capital and debt burden every year thereby improving value creation.
|
|
 |
FORWARD-LOOKING STATEMENTS
The above contains forward-looking statements such as expectations with regard to revenue and financial results. Forward-looking statements are, by their very nature, associated with risks and uncertainties that may cause actual results to differ materially from expectations. To the extent that legislation and good practice so requires, Auriga is obliged to update and adjust specifically stated expectations.
|
