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DOW AgroSciences Crop Protection Sales 2017

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Crop Protection Regional Sales

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Europe, Africa, Middle East & India

Sales in EAMEI declined 4.6% in Q2 and 5.8% during H1 2017 (not including AgroFresh dividend income). Sales were affected by decline in fungicides sales, particularly in the EU due to dry weather and reduced use of herbicides in the spring planting, partially offset by insecticides and herbicides in other parts of the region. Insecticides sales based on Naturalyte™ (Spinetoram™, Spinosad™) helped prop up numbers, but were offset by low prices.

Dow’s presence in the extensive fruit & vegetable sector is still relatively weak compared to the big 3 (Bayer, BASF, Syngenta) Competition is increasing in all the major EMEAI markets from generic formulators making use of parallel imports from China which affects prices negatively for herbicides, fungicides and insecticides.

The outlook for H2 2017 is positive for the region as the crop conditions in India are better than last year, following a good monsoon; while fall planting of winter cereals and oilseed rape are forecast to be higher than last year, due to poor crop conditions for the current harvest in Europe. Dow has a strong presence in the cereal herbicides sector in Europe and growing in India.

North America

North American sales saw a strong performance with a growth of 6.3% for the quarter and 0.4% for H1 2017 (not including AgroFresh dividend income). Dow has had very good success with the launch of their new 2,4-D + glyphosate pre-mix herbicide Enlist™/ Enlist Duo™, which faces competition from Monsanto’ Xtend™ /XtendFlex™ system. Their success has been due to higher cotton acres with growth of over 20% and also in corn, where the new herbicide-trait-seeds have been accepted very well, with fewer drift complaints than seen in Monsanto’s dicamba formulation. The new insecticide based on sulfoxaflor (Isoclast™) has also been relaunched with great success.

The outlook for H2 2017 is slightly better as the demand for insecticides is likely to increase in the Mid West as the pest attacks from Japanese beetles and other insects is on the rise. Also, fall planting of winter wheat is expected to be higher in key states of USA and Canada.

Latin America

Latin American sales were practically flat with Q2 growth of 0.3% and H1 2017 growing just 0.1%, which was considerably better than most of the other major players, who had inventory returns. This is partly due to the sales of their corn herbicides based on diclosulam mixtures in Argentina and in Brazil for the safrinha crop. There is still some insecticide and fungicide inventory with distributors as the insect and ASR infestation was much lower this season. Demand for their amide herbicides (diclosulam, pyroxsulam) grew with soil insecticides like Dursban™ in demand for corn. Currency impact was positive as the Real strengthened

The outlook for H2 2017 is more positive as Argentina and Brazil will most likely plant more corn and soybean for the main summer season, based on current crop conditions in Europe and USA, and for the winter wheat season in Mexico and other markets.

Asia Pacific

Asia-Pacific sales for Q2 declined 1.1% while H1 2017 sales declined 6% with problems arising from weed-resistance reported in the rice herbicide markets, led by China and SE Asian countries. Dow has reported that the key AI, penoxsulam, has become ineffective as weeds are not being controlled; which the company has taken seriously and is now investigating. Another factor is the introduction of new formulations by companies like Bayer with triafamone and tefuryltrione mixes in key rice markets.

Despite Australia leading to higher sale for many companies, Dow has lost share with its older insecticides, like chlorpyrifos – popular as a soil insecticide, to a host of generics from China, India and Israel. The problem is repeated with Chinese companies selling low priced herbicides. Ironically as DAS patented products gain share in PRC, they are losing some of it in the smaller SE Asian markets.

The outlook for H2 2017 is positive as summer crop planting is complete and crop conditions are generally good. Some sales like insecticides and herbicides for cotton may grow as the area is expected to be higher in China, Thailand and smaller markets. The Q3/Q4 winter wheat crop in China and 2nd rice crop in the south-eastern countries would be a boost if Dow is able to get approval for their new rice herbicide Loyant™.

Australian planting conditions are also expected to improve for cotton, legumes and oilseeds. AgroFresh™/Harvista™ This is allocated to the Agricultural business but currently reported under significant items which contribute to operating profits (EBITDA) as DAS consolidates AgroFresh™ sales based on their 40% equity in the divested business. Income was flat, although outlook is good as sales increased in the apple and other orchard crops.

Crop Protection Product Sales

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Herbicides

Herbicide sales in Q2 grew by 4.3% but declined slightly in H1 2017. Sales for the quarter received a strong boost from their new Enlist™ and EnlistDuo™ herbicide systems for cotton and corn, along with the companion traits and seed sales. For the 1st half however, sales were affected either due to the weather – too dry in Europe for the spring planting, too wet in USA and Canada – although sales did grow in cotton and corn and spring wheat, or weed resistance issues – widespread complaints in the Far East/SE Asia.

Prices were reduced in some markets to provide incentives to distributors and end-users. Sales were better in Latin America, where the amide products are enjoying some success in Argentina and Brazil. Stronger currency was offset by lower prices.

The outlook for H2 2017 is much more positive as sales of herbicides are expected to grow on corn, cotton and soybeans in Latin America and South Africa. Their new range based on halauxifen-methyl (Arylex™/Quelex™/Paradigm™/Pixxaro™) and florasulam cereal herbicides for the fall planting of winter wheat, should prove to be strong contenders in North America. Existing products would have strong demand in Europe, Middle-East, India and China.

Fungicides

Fungicide sales are estimated to have declined 10% in Q2 and 9.54% in H1 2017. Sales were affected in most regions with Europe-India suffering excessively hot and dry weather. Also driven down in Latin America due to the mild weather cutting down use of cereal and other fungicides.

The soybean crop did not consume as much rust fungicides as expected in Q1, with most companies forced to take stocks back from distributors in Brazil and Argentina. Dow’s weakness in this segment is partly due to their divestiture of European mancozeb business to Indofil. Dow also licensed the trade mark name of DithaneM45™ to Indofil.

The North American market which uses these products is largely based west of the Rockies, where the season is just about picking up. DAS does not have the range of systemic fungicide combinations used for fruit, nut, vegetable, maize and soybeans like their competitors BASF, Bayer, DuPont and Syngenta.

H2 2017 outlook is expected to be slightly better as crop conditions in Latin America, Australia, South Africa. and planting intentions in Europe, Canada and USA are positive.

Insecticides

Insecticides sales showed growth of 1.5% in Q1 and 3% growth in H1 2017. Growth was driven by insecticides in cotton, rice and other crops in USA and Europe, as well as soil insecticides for corn, cotton, vegetables. The registration requirements by the EPA were completed for sulfoxaflor (Isoclast™) and sales have grown strongly for this new product.

Thanks to higher global demand, the area planted to cotton, rice and legumes have grown by 5%-10% in USA, Australia, Brazil and Canada with increasing demand for insecticides in H1 2017. Resistance and yield issues in Bt-cotton drove farmers in India and West Africa to reverting to conventional hybrids and varieties with high yields, which require more insecticide as well as higher spray rounds. DAS have also done well with their launches of spinetoram products. They also have a dominant position in the soil fumigant sector with their chloropicrin and DD formulations as effective control agents against soil insects and nematodes.

Outlook for H2 2017 is positive as crop conditions in most regions are ideal for insecticide sprays. Already there are reports of pests emerging in corn, soybean, cotton and ripening wheat in Q3 2017 which should bode well for Dow.