Innovation and productivity savings partially offset weak
market conditions
- Sales $6.9 billion: 2 percent lower
compared with H1 2016
- Sales of new products up 33
percent1 compared with H1 2016
- EBITDA $1.7 billion: margin 24.2
percent (H1 2016: 24.9%)
- Productivity savings on
track
Reported Financial Highlights
1st Half 2017$m 1st Half 2016$m
Actual% CER1%
Sales 6,920
7,094 -2 -2
Net income 928
1,064 -13
EBITDA
1,675
1,767
-5
-9
Earnings per share2
12.32
12.69
-3
Erik Fyrwald, Chief Executive Officer, said:
“The first half of the year marked a historic moment in
Syngenta’s history with the closing of the transaction with
ChemChina. With the support of ChemChina, we are fully focused on
our objectives of strengthening our leadership in Crop Protection
and of becoming a strong number three in Seeds. We are ready to
drive the determined execution of our new strategies for these
businesses and have put in place a simplified organization aligned
to best meeting the needs of our customers.
In the first half of 2017, despite adverse weather and low
commodity prices, our sales in Europe, Africa and the Middle East
and in North America were unchanged at constant exchange rates,
with new products continuing to make a significant contribution.
Our Latin America sales declined significantly again as the
industry faces low commodity prices, and there are high channel
inventories in Brazil. We continue to drive productivity and
efficiency savings, partially offsetting the impact of the
difficult market conditions on our profitability.
Looking ahead, we will be focused on profitable market share
growth and on our ambition – to be the most collaborative and
trusted team in agriculture, providing seeds and crop protection
innovations to enhance the prosperity of farmers, wherever they
are. In the first half of 2017, our innovations in Crop Protection
enabled us to partially offset the impact of weak market
conditions. Innovation is also a key driver for our Seeds business,
and I am delighted that we recently received import approval in
China for the Agrisure Duracade® trait. Obtaining the regulatory
approval opens up new opportunities for our corn seed portfolio,
giving US growers access to exciting new hybrids as well as the
latest in corn rootworm technology.”
Financial highlights 1st Half 2017
Sales $6.9 billion
Sales were 2 percent lower at constant exchange rates, with
volume down 1 percent and prices down 1 percent. The impact of
currency on the top line was neutral. Seeds sales of $1.6 billion
were 5 percent higher at constant exchange rates; Crop Protection
sales were 5 percent lower at $5.0 billion. Sales of Controls and
Flowers totaled $0.3 billion.
EBITDA $1.7 billion
EBITDA was 5 percent lower. The EBITDA margin was 24.2 percent
(H1 2016: 24.9 percent) reflecting lower volumes and prices.
Net financial expense and taxation.
Net financial expense was $77 million (H1 2016: $130 million)
with the decrease due to lower hedging costs. The tax rate before
restructuring was 15 percent (H1 2016: 15 percent).
Net income
Net income including restructuring and impairment was $928
million (H1 2016: $1.1 billion). Restructuring and impairment
charges increased to $210 million (H1 2016: $102 million),
reflecting higher charges relating to the cash settlement of
employee share plans and impairment losses associated with the
divestment of a seeds crop. Earnings per share, excluding
restructuring and impairment, were $12.32 (H1 2016: $12.69) on a
fully diluted basis.
Cash flow and balance sheet
Free cash flow before acquisitions was $21 million (H1 2016:
$335 million) and is after one-off payments of $276 million for the
cash settlement of employee share plans following the ChemChina
transaction. This is only the second time since 2011 that free cash
flow has been positive in the first half, reflecting ongoing
working capital control. Average trade working capital as a
percentage of sales was 47 percent (H1 2016: 47 percent).
Fixed capital expenditure including intangibles was $194
million, $27 million lower than H1 2016.
Dividend
A special dividend of CHF 5.00 per share was paid on May 16,
representing a total payout of $470 million.
Business highlights 1st Half 2017
Half
Year Growth 2nd Quarter Growth 2017$m
2016$m Actual% CER% 2017$m 2016$m
Actual% CER% Europe, Africa, Middle East 2,679
2,692 -1 - 939 945 -1 +1 North
America 2,119 2,115 - - 1,173 1,129 +4 +5 Latin America 875 1,041
-16 -18 482 642 -25 -27 Asia Pacific 903 910
-1 -1 455 480 -5 -4
Total regional
sales 6,576 6,758 -3 -3
3,049 3,196 -5 -4 Controls 233 223 +5
+4 116 111 +5 +6 Flowers 111 113 -2 +1
45 45 -1 +3
Group sales
6,920 7,094 -2 -2
3,210 3,352 -4 -4
Regional sales performance
- Sales $6.6 billion, 3 percent lower
at constant exchange rates
- EBITDA $1.6 billion (H1 2016: $1.7
billion)
- EBITDA margin 24.1% (H1 2016:
25.0%)
Sales in Europe, Africa and the Middle East were
unchanged at constant exchange rates despite cold weather and low
disease pressure, which contributed to a late start to the season
in Northern and Central Europe. The impact of these conditions on
Crop Protection volumes was partially offset by the successful
launches of SOLATENOL™ in France and other European countries.
In North America sales were unchanged after a strong
second quarter which was mainly driven by corn trait royalty income
and growth in soybean seed sales. Fungicides also performed well
across the region, reflecting the ongoing success of TRIVAPRO™,
based on SOLATENOL™.
In Latin America sales declined by 18 percent. High
channel stock levels in Brazil reduced the demand for crop
protection products. Seedcare sales continued to expand driven by
CRUISER® and the successful launch of FORTENZA®.
In Asia Pacific sales were one 1 percent lower. The
decline in the second quarter was largely due to a change in sales
taxes in India, which shifted sales into the third quarter, and dry
conditions in Australia. ASEAN performed strongly, benefiting from
a good performance in fungicides, notably AMISTAR® and SCORE®.
Syngenta is a leading agriculture company helping to improve
global food security by enabling millions of farmers to make better
use of available resources. Through world class science and
innovative crop solutions, our 28,000 people in over 90 countries
are working to transform how crops are grown. We are committed to
rescuing land from degradation, enhancing biodiversity and
revitalizing rural communities. To learn more visit
www.syngenta.com and www.goodgrowthplan.com. Follow us on Twitter®
at www.twitter.com/Syngenta
Disclaimer
This press release is not an offer to purchase or a solicitation
of an offer to sell any securities.
Cautionary statement regarding forward-looking
statements
Some of the statements contained in this press release are
forward-looking statements. These statements are based on current
expectations, assumptions, estimates and projections, and involve
known and unknown risks, uncertainties and other factors that may
cause results, levels of activity, performance or achievements to
be materially different from any forward-looking statements. These
statements are generally identified by words or phrases such as
"believe", "anticipate", "expect", "intend", "plan", "will", "may",
"should", "estimate", "predict", "potential", "continue" or the
negative of such terms or other similar expressions. If underlying
assumptions prove inaccurate or unknown risks or uncertainties
materialize, actual results and the timing of events may differ
materially from the results and/or timing discussed in the
forward-looking statements, and you should not place undue reliance
on these statements. Syngenta disclaims any intent or obligation to
update any forward-looking statements as a result of developments
occurring after the period covered by this press release or
otherwise
1 At constant exchange rates
2 Excluding restructuring and impairment; EPS on a fully diluted
basis
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