Syngentas crop protection revenues went up in 2007 by 11% at constant exchange rates (CER), to $7,285 million, due to "growth in all areas" of the business. Sales were up by 14% after exchange rate variations. Syngenta chief executive officer Mike Mack concludes that it was an "outstanding year" for the company. The growth follows Syngentas flat performance in 2006 .
Mr Mack attributes the growth to a "turning point for agricultural markets", which led to record crop prices and higher demand for products, matched by "sustained investments in technology" by Syngenta. "In a buoyant market, the business once again gained share due to the strength of the portfolio and successful marketing strategies," Mr Mack adds.
Full-year EBITDA (earnings before interest, tax, depreciation and amortisation) was up at $1,821 million and up by 17% at CER. The company attributes the improved earnings to substantial volume growth and operating efficiency savings. EBITDA margin hit a record 25%.
Syngentas agchem sales by region ($ million)
Year to Dec 31st 2006 % change 2007
Europe, Middle 2,242 +13.5 2,545
East & Africa
NAFTA 2,119 + 5.6 2,238
Latin America 1,036 +37.4 1,423
Asia Pacific 981 +10.0 1,079
Total 6,378 +14.2 7,285
Europe, Middle 408 + 3.7 423
East & Africa
NAFTA 237 +27.8 303
Latin America 401 +39.9 561
Asia Pacific 212 +22.2 259
Total 1,258 +22.9 1,546
The companys crop protection business grew in all regions. Syngentas compound annual growth rate exceeded 23% at CER in the emerging markets of Latin America and eastern Europe. It achieved its largest annual sales increase of 37% in Latin America, with strong sales growth in Brazil. Sales in Europe, the Middle East and Africa were up by 5% at CER, but there was a slight decline in in western Europe due to a "portfolio transition", the chief operating officer of Syngenta Crop Protection, John Atkin, told Agrow. Lower sales in western Europe were offset by growth in the eastern part of the continent.
Syngenta "further strengthened" its position in eastern Europe. The company achieved "strong growth" in Russia, Ukraine and Kazakhstan and considers itself to be "spearheading" the agricultural development of the region. Syngenta plans to extend its "sunflower leadership" and to expand its maize portfolio in the countries to drive future growth. European weather conditions were favourable, helping to offset slow market growth in western Europe. Syngentas sales benefited from a mild winter and then a severe outbreak of potato blight (Phytophthora infestans) across northern Europe in the third quarter.
The 6% sales increase in the NAFTA region was due to the "marked expansion" of the US maize acreage and accompanying high maize prices. The development drove increased sales of herbicides and fungicides, Syngenta says. The expansion of glyphosate -tolerant maize contributed to strong demand for Syngentas glyphosate-based Touchdown in the US and Canada.
Full-year sales in Latin America "increased strongly" across all product lines, especially in Brazil and Argentina. Demand went up due to "increased plantings and usage intensity", prompted by higher maize and soybean prices. "With demand for other crops also strong, our business continued to benefit from its broad presence and well established customer relationships," Mr Mack says.
Sales in the Asia/Pacific region were up by 5% at CER. The region benefited from growth in emerging markets, notably China, India and Vietnam, due to their intensifying and modernising agriculture. "The increasing sophistication of agriculture in the emerging markets is reflected in significantly higher sales of fungicides and seed treatments," Mr Mack points out. The countries GDP growth also drives such agricultural demand, and is expected to rise further. The population growth, accompanied by growing GDP, is forecast to double the demand for food production by 2030. Syngenta views this as a potential growth area, which it aims to meet by supplying products that boost yield. Mr Mack cites "new technology", such as GM crops or novel agrochemicals, as "crucial" to meet the envisaged rising demand for agricultural output.
Sales of new products "continued to expand and reached $1,200 million, an increase of 20%, in 2007. Products that contributed significantly to the level of sales were: the herbicides, Axial (pinoxaden) Callisto (mesotrione) and Touchdown; the insecticide, Actara/Cruiser (thiamethoxam); and the fungicide, Amistar (azoxystrobin).
Syngentas agchem sales by category ($ million)
Year ended Dec 31st 2006 % change 2007
Herbicides 2,538 +15.1 2,921
selective 1,813 +11.4 2,019
non-selective 725 +24.4 902
Fungicides 1,716 +16.8 2,004
Insecticides 1,093 +10.2 1,205
Professional products(1) 958 +12.6 1,079
Others 73 + 4.1 76
Total 6,378 +14.2 7,285
Herbicides 369 +35.8 501
selective 245 +26.5 310
non-selective 124 +54.0 191
Fungicides 370 +21.3 449
Insecticides 239 +12.6 269
Professional products(1) 249 +12.0 279
Others 31 +54.8 48
Total 1,258 +22.9 1,546
(1) includes seed treatments and home and garden products.
Total sales of selective herbicides went up by 8% at CER in 2007, with double-digit growth for all major products. Increased acreage contributed to the growth, with US growers driving demand for this segment. Axial sales rose to over $100 million, while Callisto sales grew in Europe and Latin America. Non-selective herbicide sales grew by 21% at CER. The product segment "increased strongly" due to larger glyphosate-tolerant crop acreage in the US. "Higher demand combined with tight supply resulted in pricing improvements," said Mr Atkin. Touchdown sales almost doubled, driven by "strong demand" across the Americas.
Fungicide sales were driven by Amistar, Bravo (chlorothalonil) and the newly introduced Revus (mandipropamid) to reach $2,004 million in 2007, an increase of 12% at CER. Amistar achieved "exceptional growth", especially in Latin America, due to an increase in soybean acreage, soybean rust pressure and demand by wheat growers. Amistar also "progressed" in the US, Mr Atkin noted, "with the development of a new market segment to pre-empt disease in maize". There was "good growth" from Bravo, which is widely used as a resistance breaker in EU cereals. Syngenta introduced Revus in the UK and South Korea in 2007 and will launch it in the US this year.
Insecticide sales achieved lower growth than the other product sectors, at a 7% increase at CER. Karate (lambda-cyhalothrin) sales expanded in Europe, due to strong demand for cereals and Actara sales went up in Latin America. Syngentas insecticide sales were down in the US. Force (tefluthrin) sales declined due to increased plantings of corn rootworm-resistant GM maize, while the shrinking cotton area also adversely affected sales. The US Force decline was partly offset by strong demand for the product in eastern Europe.
The company labelled its pipeline as "rich" as it raised its peak sales potential during 2007. This year, Syngenta plans to launch DuPonts insecticide, chlorantraniliprole under the Durivo brand, with targeted sales of over $300 million. DuPont has granted Syngenta a licence to use chlorantraniloprole in combination products worldwide. The company plans to launch the insecticide in five countries, including the US, in 2008 and in all major markets by 2011.
In the medium term, Syngenta is working on: a cereal fungicide, 520; a seed treatment fungicide, 524; and a selective maize herbicide, 449. The company plans to launch these three products by 2012, with estimated peak sales of over $700 million. Syngenta has another three products in early development, a herbicide, an insecticide and a fungicide, to be launched after 2012. Their expected combined annual sales potential is over $500 million.
Professional product sales continued to grow, by 10% at CER, to reach $1,079 million in 2007. Seed treatments were again the main contributors to the boost due to market share growth. Cruiser achieved "excellent growth in all regions" due to: "increased penetration and treatment intensity" in maize and soybeans; new registrations in Latin America; increased demand on oilseed rape and cereals in Europe; as well as launches in Asia/Pacific. Avicta sales doubled, driven by strong demand in nematode control, which offset the adverse impact of the lower US cotton acreage. The growth was supplemented by the lawn and garden segments consolidation of Syngentas acquisition of US company Conrad Fafard in mid-2006.
Full-year seed sales increased by 12% at CER to $2,018 million. The increase was due to strong second-half demand for maize and soybean products, says Syngenta Seeds chief operating officer, Davor Pisk, following "high" commodity prices. The growth in 2007 was supported by continuing "strong" demand in other field crops, vegetables and flowers.
Syngentas vegetable seed business also benefited from a $13 million boost from the consolidation of Emergent Genetics and Israeli seed firm Zeraim Gedera. The latter strengthened Syngentas EU position in 2007 in key high-value crops, such as tomatoes. The acquisition of Fischer in Flowers added another $24 million to sales growth, while underlying performance improved in Europe and the NAFTA region. Eastern Europe drove the companys growth in field crops, such as sugar beet, sunflowers and oilseed rape in 2007. Fourth-quarter seed sales saw strong growth (50%) at CER to $307 million.
Syngentas results by business segment ($ million)
2006(1) % change 2007
Sales 6,378 +14.2 7,285
Operating income 1,184 +26.8 1,501
EBITDA(2) 1,509 +20.7 1,821
Sales 1,743 +15.8 2,018
Operating income 99 -71.7 28
EBITDA(2) 158 -38.0 98
Sales 8,046 +14.8 9,240
Operating income 1,155 +30.3 1,505
EBITDA(1) 1,535 +23.9 1,902
(1) adjusted in accordance with changes in accounting
standards; (2) earning before interest, taxes,
depreciation and amortisation.