Sumitomo Corporation (President and CEO: Susumu Kato; Head Office: Chuo-ku, Tokyo, Japan) has announced its full-scale launch into the fast-growing Russian agricultural chemicals market. Summit Agro, a new agricultural chemical sales company of Sumitomo Corporation, will be established in Russia through Summit Agro Europe (President: Naoji Ichisugi; Head Office: London, UK), a 100%-owned subsidiary of Sumitomo Corporation. The Moscow-based company is expected to begin operations in January, 2008. Through the sales of agricultural chemicals (herbicide, insecticide, fungicide, etc.) produced by Japanese manufacturers and crop seeds (corn, sunflower and rapeseed) provided by European companies to farms and local distributors in Russia, Sumitomo Corporation aims at achieving revenue of one billion yen in 2010.

The Sumitomo Group currently owns nine agricultural chemicals sales companies under Summit Agro Europe (one each in France, Hungary, Poland, Czech Republic, Rumania, Bulgaria, Ukraine, Italy and Spain). Through its offices in 10 European countries, the Summit Agro Europe Group generates more than 100 million euros (about 17 billion yen) of end-consumer sales group-wide. Sumitomo Corporation intends to further expand and boost the agricultural chemical sales businesses with the establishment of Summit Agro.

Background

The Russian economy has been showing fast growth backed by the increasing export of natural resources, such as petroleum and gas, and its GDP has been growing steadily at a rate of between 4.5% and 7.5% for the past five years. Following this economic growth, consumer spending on foods has also been increasing at a considerable pace, leading to a significant need for agricultural development. In October 2005, President Putin listed the Agroindustrial Complex as one of the four National Priority Projects (insurance, education, housing and agriculture). In response, the Russian government approved a 1.1-trillion-ruble (about 5.5 trillion yen) agricultural budget for the five-year period between 2008 and 2012. The agricultural chemical market responded to this with annual growth rate of 17.5% for the last five years, becoming a 43-billion-yen market, the 16th largest in the world. The market is expected to continue its stable growth.

Over the last 50 years, Sumitomo Group has been developing agricultural chemical businesses to comprehensively increase its revenue base through the combination of upstream (security of our own products), midstream (trade expansion) and downstream strategies (increasing and strengthening of the end-user sales network). As a downstream strategy, the group has been building a network for agricultural chemical sales throughout the world. In the European market, the sales network has been growing notably since 1992, when the company hit the Hungarian market. The current structure in Europe includes nine agricultural chemical sales companies operated under Summit Agro Europe. Summit Agro in Moscow will become the 11th base (including Summit Agro Europe itself) in Europe.

The agricultural chemical business will remain one of the core businesses of the Sumitomo Group. The group will continue sales in Europe, including in central and eastern Europe and Russia, as the main target in the downstream sales strategies, while ensuring stronger and wider operations at each stage of the value chain. The group will continue to focus on the further development of agricultural chemical businesses.

Company Profile of Summit Agro
(1) Company name: Summit Agro
(2) Head office: Moscow, Russian Federation
(3) Establishment: January, 2008 (scheduled date)
(4) Capital makeup: 100% invested by Summit Agro Europe
(5) Number of employees: 14
(6) Main business activities: Agricultural chemical and seed sales in Russia.

Attachment 1.
Agricultural chemical sales network of Sumitomo Group


Attachment 2.
Sales bases of Summit Agro Europe