Syngenta bullish despite lower sales for 2006

Swiss biotech giant Syngenta is bullish about its 2006 performance despite reported sales being one per cent lower at $8.05 billion.

"In 2006, Syngenta demonstrated resilience in markets that were challenging, notably in the important first half," said chief executive officer Michael Pragnell.

"Our continuing focus on cost and capital efficiency underpinned increased earnings and delivered strong free cash flow."

Indeed, earnings per share were up 14 per cent to $8.73, crop protection sales were up 1 per cent at $6.4 billion and new product sales up 25 per cent to $985 million.

"Crop Protection once again increased sales and gained market share driven by an excellent performance from new products; leadership was reinforced in the USA; Eastern Europe and Asia Pacific delivered strong growth; growth was also achieved in Latin America despite difficult conditions in Brazil," said Pragnell.

"Professional products accelerated growth, driven primarily by seed care. After a difficult first half in US corn & soybean, Seeds performed well in the second half with double-digit growth in vegetables and expansion in diverse field crops; further regulatory milestones were achieved including EPA approval of our corn rootworm trait."

In addition, EBITDA improved by one per cent (CER) to $1.54 billion. The company claimed that growth in high margin businesses and operational efficiency savings more than offset the impact of higher oil price-related costs and enabled additional expenditure in marketing and development.

However, the relative weakness of the US dollar in the second half of the year resulted in a $32 million negative impact on full year EBITDA.

Sales in Europe, Africa and the Middle East were unchanged. Growth in Eastern Europe, Africa and the Middle East offset lower sales in Western Europe due to the prolonged winter and ongoing structural reform.

"Syngenta gained share in several key European markets including Germany, Italy and the UK,"said the company.

"A good performance in Selective Herbicides, helped by the launch of Axial, and in professional products more than offset a decline in fungicide sales."

Furthermore, the Swiss biotech giant remains well placed to benefit from the possibility of a more relaxed regulatory environment towards genetic modification (GM) in the Europe.

Syngenta is the third largest business in the high-value commercial seeds market. Sales in 2005 topped $8 billion, and the firm employs more than 19,000 people in over 90 countries.