Syngenta confident despite decreased sales
for the first half of the year, but is confident that growth will
come on the back of newly launched products.
Sales at constant exchange rates (CER) were one per cent lower, seeds sales were four per cent lower, and EBITDA was unchanged (CER) at $1.54 billion.
What's more, Europe, Africa and the Middle East: Western European markets were affected by a late start to the season, which reduced cereal fungicide usage and by the progressive implementation of subsidy reform.
However the group, which specialises in crop protection and herbicide products, is hopeful that new products such as Axial and Avicta will help drive growth in the second half of the year. Axial was launched successfully in the UK and Germany, generating strong grower demand.
Eastern Europe continued its double-digit growth trend with a strong performance throughout the region.
"In the first half of 2006 Syngenta performed well," said chief executive Michael Pragnell.
"Crop Protection outperformed in challenging northern hemisphere markets where fungicide demand was lower. New products maintained their outstanding record of growth, augmented by the successful launches of Axial and Avicta."
Professional Products growth accelerated with strong performances in all three businesses. In Seeds, growth was achieved in all businesses with the exception of NAFTA corn due to production-related issues in the first quarter.
"We also made significant strategic progress: two acquisitions in Lawn & Garden and Vegetables Seeds respectively, a product technology exchange in Crop Protection and a marketing and technology agreement with Pioneer in US corn and soybean seeds," said Pragnell.
"Continued cost discipline enabled us to offset the impact of higher oil-related costs while targeting expenditure to drive future growth, maintaining key performance ratios and increasing earnings."
The modest first half results also reflect Syngenta's strong performance last year. The firm recorded a 9 per cent sales increase for 2005, suggesting that the Swiss biotech giant could be well placed to benefit from a more relaxed regulatory environment towards genetic modification (GM) in the Europe.
"In 2005, Syngenta delivered another year of growth across the business," said Pragnell.
Seeds sales rose by 42 per cent, up nine per cent excluding acquisitions. Crop protection sales in Europe also improved in the fourth quarter.
"Looking ahead, we see numerous opportunities to capture growth across all our businesses," said Pragnell.
"Continuing market share gains and the exciting potential of the pipeline in Crop Protection, the increasing promise of our biotechnology traits in US corn seeds and the further expansion of Professional Products, coupled with continued cost discipline, reinforce our confidence in targeting double digit growth in earnings per share through 2008."
Syngenta is the third largest player in the high-value commercial seeds market. Sales in 2005 were approximately $8.1 billion, and the firm employs more than 19,000 people in over 90 countries.
