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Press release from PR Newswire

Syngenta 2010 Half Year Results

Thursday, July 22, 2010

Syngenta 2010 Half Year Results01:00 EDT Thursday, July 22, 2010Volume upturn in Q2; strong emerging market performanceBASEL, Switzerland, July 22 /PRNewswire-FirstCall/ -- Sales up 1 percent at $6.7 billion: 3 percent lower at constant exchange rates(1)Q2: volume growth offsetting lower Crop Protection prices, notably NAFTASeeds growth accelerating, increased marginInvestments driving emerging market growth: sales up 15 percent(1)Earnings per share(2) $13.95, 9 percent lowerEarnings per share $13.39 after restructuring and impairment, 10 percent lowerReported Financial HighlightsExcluding Restructuring, Impairment H1 2010$m H1 2009$mActual%H1 2010$mH1 2009$mActual%CER(1)%Sales6,7406,655+ 16,7406,655+ 1- 3Crop Protection4,9965,000-4,9965,000-- 4Seeds1,7631,676+ 51,7631,676+ 5+ 2Operating Income1,5581,783- 131,6521,833- 10Net Income(3)1,2541,402- 111,3071,440- 9Earnings per share$13.39$14.96- 10$13.95$15.36- 9Mike Mack, Chief Executive Officer, said:"After a slow first quarter start, demand for our products has increased significantly in 2010, following a 2009 season characterized by low pest pressure and credit constraint. �This is evidenced by solid volume growth in the second quarter, leading to a reduction in the high level of channel inventories which resulted in a competitive pricing environment in developed markets, notably North America. �In the emerging markets we saw a strong performance throughout the first half, particularly in Latin America, as growers continued to invest in new technology. Our longstanding focus on operational efficiency is enabling us to confront a challenging short term environment while continuing to expand our platforms for future growth."The first half of 2010 saw many successes for our business. �Sales of new Crop Protection products increased by 14 percent with two pipeline products being launched this year. �We opened new capacity for the fungicide AMISTAR� in May and are seeing immediate demand for the increased output. The profitability of our Seeds business improved with excellent grower response to our expanded triple stack offer. �We will build on our growing corn seed franchise with the launch of AGRISURE VIPTERA? in the fall, and we will also be the first company bringing to market a water optimization solution in corn."Financial Performance 1st Half 2010Sales $6.7 billionReported sales were up one percent reflecting a positive contribution from exchange rates. �At constant exchange rates, sales were three percent lower. �Crop Protection sales* were four percent lower, with three percent volume growth partly offsetting lower prices. �Seeds sales were two percent higher, driven by volume growth of three percent.EBITDA margin 28.6 percentEBITDA was nine percent lower (CER) at $1.9 billion. �Gross margin was maintained despite lower prices due to the favorable evolution of raw material costs and to portfolio enhancement in Seeds. �The Seeds EBITDA margin increased, while in Crop Protection profitability reflected lower prices and higher operating expenses linked to investments in emerging markets and in R&D. �Currency movements including hedging made a positive contribution of $57 million to EBITDA.Earnings per share $13.95Earnings per share excluding restructuring and impairment were nine percent lower. �After charges for restructuring and impairment, earnings per share were $13.39 (2009: $14.96).Business HighlightsCrop Protection A slow start to the northern hemisphere season due to cold weather was followed by significant volume growth in the second quarter. �High channel inventories, built up in the course of 2009, were progressively drawn down in the second quarter but resulted in a competitive first half price environment, notably in NAFTA. �As a consequence some of the price gains implemented by Syngenta in the first half of 2009 were reversed. �Emerging markets saw a generally robust performance with limited impact from price.In Europe, Africa and the Middle East grower sentiment was affected by the lower wheat price, particularly in France, where the business was also affected by high channel inventory, government credit reforms and the phasing of oilseed rape herbicide sales. �In Eastern�Europe, our customers began to resume investment in high value inputs and we were able to ease credit constraints in an improved economic environment. �In NAFTA, the season progressed well leading to a rapid recovery in consumption in the second quarter, although price competition remained intense in certain segments, notably glyphosate and fungicides. �Sales in Latin America surpassed the record level of 2008, with higher soybean acreage in both Brazil and Argentina and increased disease pressure. �We reinforced our market-leading position notably for fungicides. �Growth in Asia�Pacific was strong in the emerging markets, particularly China and Vietnam, more than offsetting a decline in the largest market Japan.Selective herbicide sales were lower with declines concentrated in older products. �Sales of corn and soybean herbicides showed good growth notably in the USA, where their importance in dealing with glyphosate-resistant weeds is increasingly being recognized. �A significant reduction in Non-selective herbicides mainly reflected developments in the glyphosate market, with US prices coming down sharply from mid-2009. �Fungicide sales increased by six percent, with the lead product AMISTAR� up 17 percent despite lower US pricing in the second quarter. �Two other major fungicides, RIDOMIL GOLD� and SCORE�, also showed double digit growth with stable pricing. �Insecticide sales were unchanged with strong growth in newer products offsetting declines in older chemistries. �Seed care sales were lower owing largely to high inventories of treated seed in the USA.Professional products benefited from signs of recovery in consumer markets, notably in the Garden & Ornamentals area.New products: Sales of new products (defined as those launched since 2006) increased by 14 percent (CER) to $295�million. �Sales of the nematicide seed treatment AVICTA� doubled following its launch on corn in the USA. �The cereal herbicide AXIAL� showed strong growth in Eastern Europe and further expansion in its largest market Canada. �The insecticide DURIVO� grew rapidly on rice and vegetables across Asia. �The fungicide REVUS�, used on vegetables and vines, expanded outside Europe and is now sold in all regions. �Isopyrazam, a broad spectrum fungicide with a new mode of action, was launched on barley in the UK.Capacity expansion: New capacity for AMISTAR� was opened at Grangemouth, UK in May. �The opening will result in a production increase of approximately 20 percent in 2010, with immediate demand for the increased output. �R&D pipeline: The combined peak sales potential of our Crop Protection pipeline is in excess of $2 billion. �An initial launch in granular form of INVINSA?, a unique product for crop stress protection in field crops, is scheduled for later this year. �The late development pipeline also includes sedaxane, a seed treatment fungicide; bicyclopyrone, a corn and sugar cane herbicide; and an insecticide cyantraniliprole.EBITDA was 13 percent lower (CER) at $1.6 billion with a margin (CER) of 31.8�percent (2009:�35.2�percent).Seeds Growth in Seeds was broad-based with a noticeable acceleration in the second quarter.Corn & Soybean saw growth of eight percent after adjusting for a one off change in US sales terms, which brought sales forward from the first quarter of 2010 to the fourth quarter of 2009. �Sales of our proprietary triple stack corn in the US market expanded significantly to represent around 60 percent of total, approaching market penetration rates. �Sales grew rapidly in Latin America and Eastern Europe.Diverse Field Crops showed solid internal growth supplemented by the acquisition of the Monsanto sunflower business in August 2009. �The main driver was Eastern Europe, where sales increased by more than 30 percent as growers resumed investment in high quality hybrids and varieties.Growth in Vegetables accelerated, led by NAFTA where sales of watermelon and sweet corn, for which capacity has recently been expanded, grew strongly. �Sales in Latin America and the emerging markets of Asia Pacific also grew strongly.Flowers sales were slightly lower owing to weakness in the US market, although in Europe sales showed a significant upturn reflecting an enhanced portfolio and more favorable consumer sentiment.R&D pipeline: Our broad spectrum lepidoptera trait AGRISURE VIPTERA? received approval from the U.S. Department of Agriculture and from the Japanese regulatory authorities in the first half of the year. �The trait will be launched in the USA as part of a multi-stack offer in the fourth quarter and will provide growers with a new standard for pest control and yield performance. �Also this year Syngenta will bring to market AGRISURE�ARTESIAN?, the industry's first water optimization solution, based on native traits. �Over the next two years a complete range of refuge reduction options in corn will be launched, including AGRISURE�E-Z�REFUGE? (refuge in a bag).EBITDA of $352 million was up seven percent (CER), driven by gross margin expansion. �The EBITDA margin (CER) reached 20.1 percent (2009: 19.1 percent) and remains on track to reach the full year target of 15 percent in 2011.Net financial expenseNet financial expense at $55 million was slightly higher compared with the first half of 2009 ($46 million).TaxationThe underlying tax rate for the period was 19 percent, unchanged compared with the first half of 2009. � In the second half of the year the tax rate is likely to be higher than in the same period last year; over the medium term a tax rate in the low to mid-twenties is expected.Cash flow Free cash flow was $74 million (2009: $79 million). �Fixed capital expenditure of $266�million (2009:�$364�million) reflected the concluding phase of capacity expansion projects for key active ingredients. �Average trade working capital as a percentage of sales was 43�percent (2009:�40�percent) reflecting an increase in inventories in the second half of 2009. We continue to target a reduction in trade working capital as a percentage of sales as continued volume growth reduces inventories.Dividend and share repurchaseA dividend of CHF 6.00 per share (2009: CHF 6.00) was paid in the second quarter, representing a total payout of $524 million. �In line with Syngenta's objective of returning around $750 million to shareholders in 2010, 288,700 shares were repurchased in the first half at a total cost of $67 million. �The total cash return to shareholders in the first half was $591�million.OutlookMike Mack, Chief Executive Officer, said:"In the second half of 2010 we expect positive volume momentum to continue. �As we approach the main season in Latin America, we are assuming that the current favorable fundamentals will support further growth in our business there. �This, coupled with careful control of costs and increasing profitability in Seeds, should allow us to achieve full year operating income around last year's level. �As indicated earlier in the year, the evolution of earnings per share** will reflect increased net financial expense and a higher tax rate."Looking ahead, our focus will be on achieving further market share gains in developed markets while building on our track record of operational efficiency. �This will enable us to continue investing in emerging markets, which represent the main growth driver for our business and where we have established leadership positions. �We remain firmly committed to our investments in R&D, which will accelerate new product launches and build on our ability to deliver integrated solutions to growers worldwide."Crop ProtectionFor a definition of constant exchange rates, see Appendix A of full English version.1st HalfGrowth2nd QuarterGrowthProduct line2010$m2009$mActual%CER%2010$m2009$mActual%CER%Selective Herbicides1,6201,615-- 4877814+ 8+ 5Non-selective Herbicides548691- 21- 25316362- 13- 16Fungicides1,4881,356+ 10+ 6681634+ 7+ 5Insecticides700673+ 4-349318+ 10+ 8Seed Care369392- 6- 10130135- 4- 6Professional Products242225+ 7+ 4122115+ 6+ 4Others2948- 38- 391137-68- 68Total4,9965,000-- 42,4862,415+ 3-Selective Herbicides: �major brands AXIAL�, CALLISTO� family, DUAL�/BICEP� MAGNUM, �FUSILADE�MAX, TOPIK�Sales volume was slightly higher with a substantial increase in Latin America, partially offset by lower volumes in Europe due to the phasing of oilseed rape herbicides in France and Germany, which reduced sales by $47 million. �The decline in total sales (CER) was due to lower prices, mainly in NAFTA, in a more competitive environment. �The CALLISTO� range showed growth in a strong pre-emergence corn herbicide market in the USA.Non-selective Herbicides: �major brands GRAMOXONE�, TOUCHDOWN�In non-selectives, TOUCHDOWN� sales decreased significantly in NAFTA due to lower prices affecting the first half comparison. �Volume was also lower reflecting high channel inventories. �GRAMOXONE� sales were lower with some related weakness, notably in Latin America and Asia Pacific. Fungicides: �major brands ALTO�, AMISTAR�, BRAVO�, REVUS�, RIDOMIL�GOLD�, SCORE�, TILT�, UNIX� �Fungicide sales were six percent higher on strong volume growth in Latin America, NAFTA and Asia Pacific. �Volume growth was partially offset by price declines, mainly in NAFTA due to high channel inventory and a competitive environment. �AMISTAR� sales increased significantly with volume 31 percent higher, characterized by increased usage intensity and growers' focus on plant performance in key crops including rice and vegetables in Asia Pacific, soybean in Latin America and corn in NAFTA. �REVUS� continued to show strong growth, with launches in nine new countries. �Our new fungicide, isopyrazam, was introduced in the United Kingdom on barley with first sales in the second quarter. �Additional launches in further countries are planned in key cereals and fruit and vegetable markets.Insecticides: major brands ACTARA�, DURIVO�, FORCE�, KARATE�, PROCLAIM�, VERTIMEC�Insecticide sales were flat with strong growth in DURIVO� and ACTARA� offset by a more competitive environment in some of the older chemistries. �DURIVO� continued to perform strongly in rice and vegetables in Asia Pacific and continued its expansion into new markets, notably with successful launches in Latin America and Japan. �ACTARA� sales growth was broad based with strong gains in Latin America and Asia Pacific.Seed Care: major brands AVICTA�, CRUISER�, DIVIDEND�, MAXIM�Seed care sales were 10 percent lower owing largely to high inventories of treated seed in the USA. �The decline in the USA was partially offset by growth in CRUISER� in Latin�America and Asia Pacific.Professional Products: major brands FAFARD�, HERITAGE�, ICON�Professional product sales were four percent higher as the consumer-led areas of our Lawn�& Garden business showed signs of recovery. �Both Western and Eastern Europe showed double digit growth and the emerging Latin America business expanded rapidly.1st HalfGrowth2nd QuarterGrowthCrop Protectionby region2010$m2009$mActual%CER%2010$m2009$mActual%CER%Europe, Africa, Mid. East1,7901,810- 1- 5831823+ 1-NAFTA1,6621,882- 12- 15942989- 5- 8Latin America710550+ 29+ 29330262+ 26+ 26Asia Pacific834758+ 10+ 2383341+ 12+ 5Total4,9965,000-- 42,4862,415+ 3-Europe, Africa and the Middle East: �Sales were lower due to a prolonged winter in Western Europe which delayed the start of the season as well as the phasing of oilseed rape herbicides. �In France, overall consumption of crop protection products was lower as a result of high channel inventory. �Declines in Western Europe were partially offset by growth in Eastern Europe where the credit situation in most countries eased. �This supported a return to investment in high value inputs, notably in the Ukraine where sales increased almost 60�percent. �Africa and the Middle East showed strong growth in selective herbicides, fungicides and seed care.NAFTA: �Sales were lower in NAFTA due to a more competitive environment. �High channel inventory and a more cautious stance by distributors, as well as marketing actions to speed technology adoption, contributed to price pressure. �Excluding glyphosate, price was 11 percent lower while volume was slightly higher primarily on an expanded fungicide market. �TOUCHDOWN� accounted for more than 40 percent of the sales decline in NAFTA.Latin America: �Latin America completed an excellent season with significantly higher sales; slightly higher than the record first half level of 2008. �Soybean acreage in the region expanded and increased disease pressure resulted in greater usage intensity and a reinforcement of Syngenta's market leading position. �Liquidity also improved markedly and soybean prices were supported by Chinese demand. �Growth was led by PRIORI Xtra�, our leading fungicide for the treatment of soybean rust.Asia Pacific: �Growth in Asia Pacific continued as strong government support for agriculture enabled growers to continue investing in yield improvement, notably in rice and vegetables. �Growth was primarily due to increased demand for fungicides, led by AMISTAR�, with sales up 12 percent.SeedsFor a definition of constant exchange rates, see Appendix A of full English version.1st HalfGrowth2nd QuarterGrowthProduct line2010$m2009$mActual%CER%2010$m2009$mActual%CER%Corn & Soybean806843- 4- 7253213+ 19+ 16Diverse Field Crops386304+ 27+ 19193155+ 24+ 19Vegetables360322+ 12+ 9200180+ 11+ 11Flowers211207+ 2- 18174+ 9+ 8Total1,7631,676+ 5+ 2727622+ 17+ 14Corn & Soybean: major brands AGRISURE�, GARST�, GOLDEN HARVEST�, NK�Corn and Soybean sales were up by eight percent adjusting for the impact of advanced sales in the fourth quarter of 2009. �Growth occurred across all regions, led by a strong season in the US and good growth in Latin America and Eastern Europe. �Sales of our proprietary triple stack corn AGRISURE� 3000 GT in the USA showed a significant advance, representing around 60�percent of our portfolio.Diverse Field Crops: �major brands NK� oilseeds, HILLESHOG� sugar beetDiverse Field Crops sales increased significantly on good underlying growth supplemented by acquisitions. �Sales expanded in Eastern Europe, with significant growth in Russia and the Ukraine on higher sunflower acreage. �The acquisition of Monsanto's sunflower business added 12 percent to product line sales. Vegetables: major brands DULCINEA�, ROGERS�, S&G�, Zeraim Gedera Vegetables continued to show excellent growth with sales up nine percent. �Underlying growth excluding acquisitions and divestments was 10 percent, with double digit expansion in all regions with the exception of Europe, where sales were unchanged. �Growth continued to reflect the ongoing progress of high value products in our strategic crops, notably tomato, watermelon and sweet corn. Flowers: major brands Fischer, Goldfisch, Goldsmith Seeds, S&G�, YoderFlowers sales were down slightly due to NAFTA where the market was characterized by lower consumer demand in a subdued economic environment.� The decline in NAFTA was partially offset by growth in Europe and Asia Pacific as those markets began to show signs of recovery.1st HalfGrowth2nd QuarterGrowthSeeds by region2010$m2009$mActual%CER%2010$m2009$mActual%CER%Europe, Africa, Mid. East762659+ 16+ 9297251+ 18+ 15NAFTA826880- 6- 7329300+ 9+ 8Latin America6241+ 52+ 523114+ 122+ 122Asia Pacific11396+ 18+ 117057+ 24+ 16Total1,7631,676+ 5+ 2727622+ 17+ 14Announcements and MeetingsThird quarter trading statement 2010October 14, 2010Announcement of 2010 Full Year ResultsFebruary 9, 2011First quarter trading statement 2011April 15, 2011AGMApril 19, 2011Syngenta is one of the world's leading companies with more than 25,000 employees in over 90�countries dedicated to our purpose: Bringing plant potential to life. �Through world-class science, global reach and commitment to our customers we help to increase crop productivity, protect the environment and improve health and quality of life. �For more information about us please go to to the editor:Further information, documents and images will be available on our website Statement Regarding Forward-Looking StatementsThis document contains forward-looking statements, which can be identified by terminology such as 'expect', 'would', 'will', 'potential', 'plans', 'prospects', 'estimated', 'aiming', 'on track' and similar expressions. Such statements may be subject to risks and uncertainties that could cause the actual results to differ materially from these statements. We refer you to Syngenta's publicly available filings with the U.S. Securities and Exchange Commission for information about these and other risks and uncertainties. Syngenta assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors. This document does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer, to purchase or subscribe for any ordinary shares in Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on in connection with, any contract therefor.(1)Growth at constant exchange rates, see Appendix A of full English version.(2)EPS on a fully-diluted basis, excluding restructuring and impairment.(3)Net income to shareholders of Syngenta AG.(*)Crop Protection sales include $24 million of inter-segment sales.(**)Fully diluted, excluding restructuring and impairmentSyngenta International AGMedia contact:Analyst/Investor contacts:Media OfficeMedard Schoenmaeckers Jennifer GoughCH-4002 BaselSwitzerland � +41 61 323 2323 � Switzerland � +41 61 323 5059SwitzerlandUSA �+1 202 737 6521Tel: �+41 61 323 23 23John HudsonFax: �+41 61 323 24 24Switzerland � +41 61 323 6793www.syngenta.comUSA �+1 202 737 6520SOURCE SyngentaFor further information: Medard Schoenmaeckers, Switzerland, +41-61-323-2323, Analyst/Investor contacts: Jennifer Gough, Switzerland, +41-61-323-5059, USA, +1-202-737-6521, John Hudson, Switzerland, +41-61-323-6793, USA, +1-202-737-6520