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Syngenta’s agchem sales down 23% in Q4 2015
Feb. 5, 2016
Syngenta AG
SwitzerlandFollow
SwitzerlandSyngenta’s group sales, including Lawn and Garden, decreased by 13% in the fourth quarter of 2015. The crop protection sales were down by 23% to $2,154 million, while seed business increased significantly by 20% to $856 million. For the full year of 2015, sales decreased by 11 percent to $13.4 billion.
Regional sales
Europe, Africa and the Middle East: The region achieved further growth at constant exchange rates in the fourth quarter, measured against a strong finish to the 2014 season: higher volumes in the quarter were supported by a successful campaign for Corn and Sunflower seeds. Full year growth reflected significant price increases in the CIS which offset currency depreciation. Crop Protection volumes were slightly above 2014 levels despite dry conditions, low disease pressure and depressed cereals prices, with strong performances by the cereal fungicides SEGURIS® and MODDUS® as well as Seedcare. This offset the erosion of seeds volumes in the CIS caused by price increases.
North America: Volume growth was strong in the quarter, driven by the success of ACURON™, a newly launched herbicide that provides corn farmers with an effective solution to combat weed resistance. Sales in the quarter also included trait revenues of $145 million from the licensing agreement with KWS and Limagrain announced in October. The deliberate reduction in glyphosate volumes and lower glyphosate prices reduced full year sales by 4 percent. In the USA, ongoing low commodity prices negatively affected the demand for crop enhancement applications. In Canada, sales were lower owing to dry weather conditions and high channel inventories of Seedcare products.
Latin America: Market conditions deteriorated in the second half of the year, with the sharp depreciation of the Real as well as tight credit conditions for growers in both Brazil and Argentina. Despite this ELATUS™ performed well in its second year in Brazil, demonstrating the continuing customer demand for new technology. The fourth quarter also included $55 million in trait revenue from the KWS and Limagrain agreement. In 2015 the company implemented a change in contractual sales terms for crop protection products in Brazil, which caused a timing change in sales recognition. The full year effect was a $239 million increase in sales. The deliberate reduction in glyphosate volumes and lower glyphosate prices reduced sales by $224 million.
Asia Pacific: Full year sales volumes were affected by extended drought conditions in ASEAN and the phase-out of paraquat sales in China due to a regulatory change. Pricing gains however were broad based, with significant increases notably in South Asia; seeds sales in ASEAN reflected the continued adoption of GM technology. Australasia saw good volume growth with increased cotton acreage driving higher Seedcare sales.
Product line sales
Selective herbicides: major brands ACURON™, AXIAL® , CALLISTO® family, DUAL MAGNUM® , BICEP® II MAGNUM, FUSILADE® Max, FLEX® , TOPIK® Sales performance in North America was driven by the success of ACURON™, which achieved its target of $100m sales in its launch year. This more than offset the impact of dry weather conditions in Canada. In Europe, strong price gains were recorded in the CIS to compensate for currency depreciation. Sales in Latin America were higher as a result of the change in sales terms in Brazil.
Non-selective herbicides: major brands GRAMOXONE® , TOUCHDOWN® The sales decline is largely a result of the decision to reduce volumes of solo glyphosate in order to improve the profitability of the business. TOUCHDOWN® prices were also lower reflecting a decline in the active ingredient purchasing costs. GRAMOXONE® sales in China have been phased out following a regulatory change affecting paraquat liquid formulations.
Fungicides: major brands ALTO® , AMISTAR® , BONTIMA® , BRAVO® , ELATUS™, MODDUS® , REVUS® , RIDOMIL® Gold, SCORE® , SEGURIS® , TILT® , UNIX® Broad-based growth was achieved across the portfolio despite dry conditions in parts of Europe and Asia Pacific. ELATUS™ performed well in its second year in Brazil, with sales exceeding $400 million. Volume growth was solid across Europe with a strong performance by the cereals fungicides ALTO® , MODDUS® and SEGURIS® . In January 2016 Syngenta announced that SOLATENOL™, the active ingredient used in ELATUS™, has been approved by the EU authorities, with first sales in France expected for the 2016/2017 season.
Insecticides: major brands ACTARA® , DURIVO® , FORCE® , KARATE® , PROCLAIM® , VERTIMEC® Growth came from price increases in Europe and volume growth in Asia Pacific, as well as new product introductions in China and India. This did not compensate for the impact of reduced sales in Latin America, due to dry weather and low insect pressure in Argentina and to high channel inventories in Brazil. However, ACTARA® performed strongly in Brazil in the fourth quarter with an improvement in the sugar cane market.
Seedcare: major brands AVICTA® , CRUISER® , DIVIDEND® , CELEST® /MAXIM® , VIBRANCE® Growth in Europe reflected a solid performance of Seedcare solutions for the cereals market in the CIS and Central Europe. In Asia Pacific, sales were boosted by increased focus on key accounts in China and by broad-based growth in Australasia. In North America, sales were affected by high channel inventories in the Canadian cereals market and lower cotton acres in southern US states.
Corn and soybean: major brands AGRISURE® , GOLDEN HARVEST® , NK® Corn sales were up in all regions, with a significant progression in the Americas owing to the licensing agreement with KWS and Limagrain, for which revenue was recorded in the fourth quarter. This was partially offset by lower US branded sales due to the acreage shift from corn to soybean. Corn volumes were down in Europe as a consequence of reduced acreage, but the impact was offset by significant price increases in the CIS. Strong price gains were recorded in Asia Pacific, driven by increased adoption of GM technology. Soybean sales in Latin America were lower, as sales were shifted to distributors as part of the implementation of the Integrated Business Partner model in Brazil.
Diverse field crops: major brands NK® oilseeds, HILLESHÖG® sugar beet Sunflower sales increased significantly in Europe, the most important region, reflecting substantial price increases in the CIS which fully offset the impact of currency depreciation. These price increases had some impact on volume, as high value hybrids faced competition from local seeds. Sugar beet sales were lower, as oversupply on the sugar market led to significant acreage shifts in Europe.
Vegetables: major brands ROGERS®, S&G® Growth was broad-based across the four regions. Price increases were robust, owing to a focus on capturing value for high quality hybrids across the portfolio and in particular to the strong return on investments being achieved by growers in South Asia. Sweetcorn sales in the USA were affected by high processor inventories.
Lawn and Garden: Sales were up 3 percent at constant exchange rates, with volume growth driven by the introduction of the new SDHI fungicide VELISTA™ in North America and higher vector control sales in Africa and the Middle East. Volumes in Flowers were lower as a consequence of a new strategy focusing on larger customers in order to improve profitability. The business has again exceeded its target of a 20 percent EBITDA margin, set for 2015.
Outlook
John Ramsay, Chief Executive Officer, said: “In 2016 our focus will be on further improving profitability in challenging market conditions. Progress will be underpinned by additional cost savings under the AOL program and by a reduction in raw material costs. The AOL program also targets a release of working capital, which will contribute to an increase in free cash flow for the year to over $1 billion. Growth in sales of new products and further enhancements in sales force effectiveness should enable us to maintain and grow market share. In addition, our experience of risk management in emerging markets means that we are best placed to weather the current period of volatility. Our strong customer relationships, together with our broad portfolio and integrated offers, will ensure that we maintain and expand our leadership in these markets, which continue to represent the major driver of long term industry growth.”
Source: Syngenta news release
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