Agricultural Chemicals 2015 Supply Chain Benchmarking Study

Agricultural Chemicals
2015 Supply Chain Benchmarking Study –
Summary of Findings
Copyright © 2016 Accenture All rights reserved.

Study Background
2012-2014 data for the leading global
agrochemical companies
Benchmark key financial metrics and
analyze reasons for individual peers
deviating from average
Accenture works with the leading agrochemical companies to annually benchmark supply
chain and business performance. This report highlights the key findings and insights from
our 2015 study, which focused on the quantitative aspects of performance within the crop
protection segment.
Crop protection segment only
Active ingredient (AI), formulations &
finished products (FFP) and raw material
(RM) supply chains
Quantitative metrics across key financial
measures (revenue, COGS, EBITDA),
working capital, capital efficiency, product
portfolio and supply chain strategy
Scope
Provide study participants with fact-based
view on potential areas for improvement
Define key performance indicators
(KPIs) for comparative analysis amongst
participating companies
Objectives
Copyright © 2016 Accenture All rights reserved. 2
View glossary on slide 11 for explanation of terms

Executive Summary
The KPI dashboard below summarizes the findings of our survey across all metrics that
were evaluated. The combination of declining revenue growth and increasing inventory
levels while CAPEX to revenue ratios remained stable suggests that agrochemical
companies may not have anticipated the slow down or the pace and severity of diminishing
growth. Thus, they continued to invest even as revenues began to decrease.
KPI
Industry Peer
Average (2014)
Industry Peer
Average (2013)
Revenue Growth YOY 4.5% 10.7%
EBITDA Margin 23.9% 24.8%
EBITDA Growth YOY 0.9% 14.1%
Days Sales Outstanding (DSO) 126 days 119 days
Days Payables Outstanding (DPO) 106 days 103 days
Days on Hand (DOH) Inventory 215 days 205 days
Cash Conversion Cycle Time 236 days 221 days
CAPEX Growth 24% 26%
CAPEX to Revenue Ratio 0.05 0.04
Return on Invested Capital (ROIC) 31% 35%
Number of new product (formulation) launches 64 65
View glossary on slide 11 for explanation of terms

Study Results
Financials
Supply Chain
Strategy
Working
Capital
Capital
Efficiency
Product
Portfolio
View glossary on slide 11 for explanation of terms.

-10%
-5%
0%
5%
10%
15%
20%
25%
YOYGrowth% Financials
Annual revenue growth rates have slowed
significantly YoY. Average rates dropped almost 60%
from 2013 to 2014 (from 10.7% to 4.5%).
Findings Insights
From 2012 to 2014, EBITDA margins maintained a
stable range of 24-25%. However, there was a large
increase from 2012 to 2013 (2.6% to 6%) in EBITDA
margin spread.
In line with decreasing revenue growth, average
annual EBITDA growth also showed a major decline,
falling from 14% in 2013 to 1% in 2014.
Annual Revenue & EBITDA Growth
Though with varying magnitude, all participants were
impacted by the challenges facing the industry.
The wide yet consistent range of EBITDA growth
suggests there is opportunity for underperforming
firms to improve by at least “reverting to the mean.”
24%
25%
24%
20%
25%
30%
2012 2013 2014
Range Average
EBITDA Margin
2013 2014
Revenue Growth
10.7%
4.5%
14.1%
0.9%
2013 2014
EBITDA Growth
Range Average
Source: Accenture 2015 Agricultural Chemicals Supply Chain Benchmarking Study

6
Working Capital
Findings Insights
80
120
160
200
240
280
320
2012 2013 2014
Cash conversion cycle (CCC) days increased 11%
between 2012 and 2014, steadily rising from 213 to
236. This was driven mainly by rising DSO and DOH
without a corresponding increase in DPO (i.e.,
companies are taking longer to convert inputs to
cash flows).
Average DOH inventory levels rose 10% (from 196
to 215), with AI and RM driving the increase while
FFP posted a slight decline
The variation in the range of CCC days across
participants suggests significant potential for
companies to improve their working capital position.
The observed inventory composition shift away from
FFP toward AI and RM indicates possible adoption
of postponement strategiesthat is, moving stocks
to earlier production stages for greater flexibility
Cash Conversion Cycle Inventory Levels & Composition
213 221 236
Days
FFP AI RM
20
60
100
140
180
220
215
110
(51%)
71
(33%)
35 (16%)
2014
111
(57%)
57
(30%)
28 (14%)
2012
196
114
(56%)
62
(31%)
29 (14%)
2013
205
Days

Capital Efficiency
Findings Insights
7
3.7%
4.2%
5.0%
0%
2%
4%
6%
8%
10%
2012 2013 2014
Range Average
1.64
1.88
2.20
0.0
1.0
2.0
3.0
4.0
2012 2013 2014
Range Average
Average CAPEX growth has remained relatively
consistent at 24-26%. ROIC has also been fairly
stable, ranging from 31% to 35%.
While depreciation as a percentage of EBITDA
has been flat at 9-10%, the CAPEX to depreciation
ratio increased from 1.64 to 2.20.
The data indicates increasing investment activities in
the industry and implies a focus on future growth
and expansion.
CAPEX to Depreciation Ratio CAPEX to Revenue Ratio
CAPEX as a percentage of revenue increased
steadily from 3.7% to 5%.

Product Portfolio
Findings Insights
8
90
65 64
450
327 321
0
100
200
300
400
500
2012 2013 2014
#ofNewProducts
Average Participant Total
The scope of new product launches has apparently
narrowed, potentially to improve EBITDA through
cost containment and driving ROIC on targeted
product launches
New Product Launches
The number of new product launches across
participating companies dropped significantly from
2012 to 2013 but levelled off in 2014.
Note: New product launches were defined as the number of new formulations introduced globally each year. It does not include existing
formulations that have been extended into a new region.

Supply Chain Strategy
Findings Insights
9
60%
40%
40%
80%
100%
100%
Economic risks
Environmental risks
Distributors
Geopolitical risks
Own production network
Suppliers and tollers
% of Companies
40%
20%
60%
80%
0%
25%
50%
75%
100%
Measure Impact of
Sustainability
Measure Quantitative
Contribution of
Sustainability
Yes No
All participants have formal programs in place to
mitigate supply chain delivery risk.
The three most commonly cited elements
considered in a supply chain risk strategy are: 1)
suppliers and tollers, 2) own production network and
3) geopolitical risks.
Measurement of the impact and quantitative
contribution of sustainability is limited among
participants.
There is a disconnect between what participants
say about the importance of sustainability and
what they are doing. All believe that sustainability
impacts brand value and reputation, but few
enforce the measurement of its contribution.
Elements considered in supply
chain risk strategy
Measurement of sustainability
impact and contribution

Looking Ahead
With a flagging global economy and crop prices expected to remain low at least until 2017,
volatility in the agrochemical sector is expected to continue for some time into the future.
To survive, grow, and establish a competitive advantage during this period, it is critical for
agrochemical companies to optimize their supply chain strategy and operations. Accenture
believes this requires a keen focus on the following three important areas:
1. Planning with purpose to increase agility and efficiency of the asset base
2. Embracing new digital technologies across the farm-to-table value chain to enable richer visibility
of assets and distribution modes and enable predictive analytics
3. Strategic cost reduction to respond to immediate market challenges while retooling to be ready for
the next upturn in the commodity cycle
Agrochemical companies face a(nother) “new normal,” particularly in light of the
industry-changing mergers and acquisitions that have recently been announced, with
more anticipated. Those that adapt to the new business landscape will be best positioned
for scalability, ease of integration and future growth.
We look forward to sharing the results of our 2016 study early next year.
10

Term Definition
AI Active ingredients and related intermediate materials
CAPEX Capital Expenditures = sum of proceeds and purchases related to investing activities
CAPEX to Depreciation Ratio CAPEX / Depreciation
CAPEX to Revenue Ratio CAPEX / Revenue
Cash Conversion Cycle (CCC) Inventory Days of Supply + Days Sales Outstanding – Days Payable Outstanding
COGS Cost of Goods Sold = cost associated with buying raw materials and producing
finished goods; includes direct (labor, materials) and indirect costs (overhead)
DOH Days on Hand = inventory days of supply; the amount of inventory (stock) expressed
in days of sales
DPO Days Payables Outstanding = [12 month rolling average of gross accounts payable] /
[total gross annual material purchases / 365]
DSO Days Sales Outstanding = the length of time from when a sale is made until cash
for it is received from customers; the amount of sales outstanding expressed in days
EBITDA Earnings before interest, taxes, depreciation and amortization
FFP Formulations and finished products, and related intermediate materials
Invested Capital Operating net working capital + net property, plant & equipment + capitalized operating
leases + other operating assets + operating intangibles − other operating liabilities −
cumulative adjustment for amortization of R&D
Net Investment CAPEX - Depreciation
RM Raw materials for AI and FFP plus packaging materials
ROIC Return on invested capital
Toller Processor who charges a fee ("toll") for processing raw materials
11
Glossary

Accenture Insights Platform: Simplifying
Analytics for Businesses
12Copyright © 2016 Accenture All rights reserved.
Additional suggested reading
Digital Supply Chain Planning in
Chemicals: Six Capabilities to Win
Digital Agriculture: Improving Profitability
Is Your Supply Chain a Growth Engine?
Walking the Walk: Drive Competitiveness
Through Ethical Supply Chains
Driving Unconventional Growth through
the Industrial Internet of Things

Learn more about us on Accenture.com.
Chemicals
Agribusiness
Supply Chain
Follow our conversation on chemicals.
Contact us for additional information about
the 2015 Agricultural Chemicals Supply
Chain Benchmarking Study.
Michael Insogna
Senior Manager, Chemicals
Accenture Consulting
michael.a.insogna@accenture.com
Philipp Aggarwal
Manager, Operations Consulting
Accenture Strategy
philipp.aggarwal@accenture.com
@AccentureChems on Twitter
Accenture Chemicals on LinkedIn
Jennifer Helle
Managing Director, Global Agribusiness Lead
Accenture Consulting
jennifer.a.helle@accenture.com

About Accenture
Accenture is a leading global professional services
company, providing a broad range of services and solutions
in strategy, consulting, digital, technology and operations.
Combining unmatched experience and specialized skills
across more than 40 industries and all business
functions—underpinned by the world’s largest delivery
network—Accenture works at the intersection of business
and technology to help clients improve their performance
and create sustainable value for their stakeholders. With
approximately 373,000 people serving clients in more than
120 countries, Accenture drives innovation to improve the
way the world works and lives. Visit us at
www.accenture.com.
This document is produced by consultants at Accenture
as general guidance. It is not intended to provide specific advice on
your circumstances. If you require advice or further details on any
matters referred to, please contact your Accenture representative.
14
Copyright © 2016 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.

Agricultural Chemicals 2015 Supply Chain Benchmarking Study

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