Syngenta’s agchem sales flats in Q2 2014

Syngenta’s crop protection sales were up by 3% to $2,967 million in the secondary quarter ended on June 30th, while seed business dropped by 8% to 707 million. Total group sales increased very slightly by 0.2% to $3,826 million.

For the first half year of 2014, crop protection sales were up by 3.2% to $6,211 million. Seeds sales fell by 4.3% to $1,966 million. Total group sales, including lawn and garden business, increased slightly by 1.4% to $8,508 million. EBITDA was 3% lower owing to currency movements but increased by 6% at constant exchange rates. The EBITDA margin was 26.6%.  

According to Syngenta CEO Mike Mack, “The pace of sales growth in the first half was held back by adverse weather conditions in North America which, combined with a reduction in corn acreage, significantly impacted the crop protection market. Growth in all other regions was robust, exceeding our full year target rate of 6% at constant exchange rates. Emerging market sales increased by 11%, with performance clearly demonstrating the success of our integrated strategy. Pricing remained firm across the business.”
 

Regional sales

For the secondary quarter of 2014, the crop protection sales in Europe, Africa and Middle East increased by 5.1% to $985 million, while seed sales dropped by 11.9% to $259 million. An early start to the season in these regions led to increased weed, disease and insect pressure contributing to a strong first half performance. The slower pace of growth in the second quarter was primarily due to the impact of lower spring plantings on seeds sales; crop protection demand remained robust. In the first half all territories registered growth in integrated sales, with the strongest growth rates coming from the CIS (Commonwealth of Independent States) and Iberia. In the CIS, volume growth was achieved despite the political uncertainty and was augmented by significant price increases in Ukraine to offset currency depreciation.  
 

In Latin America, crop protection sales increased by 11.9% to $592 million, and the sales of seed were up 2.4% to $84 million. The pace of growth continued to improve despite dry conditions in Brazil and Argentina which reduced selective herbicide sales in the second quarter. TOUCHDOWN® sales were also lower in line with the re-focusing of this business. Infestation by the helicoverpa caterpillar contributed to a significant increase in insecticide sales in Brazil, where fungicide sales also increased sharply. In Venezuela, sales resumed following a payment delay at the end of 2013. Sales of both corn and soybean seeds increased.

In Asia Pacific, growth was strong in both developed and emerging markets. In Australia, rainfall increased grower confidence resulting in growth across the crop protection portfolio. South Asia saw strong growth in protocols for Vegetables and a significant increase in corn seed sales. In China, sales of AMISTAR® technology continued to expand on rice and vegetables.

Product line sales for crop protection

For the first half of 2014, the sales of selective herbicides were flat. This is due to strong growth in Europe, Africa and the Middle East and in Asia Pacific more than offset weather-related weakness in the Americas. The cereal herbicide AXIAL® continued to register double digit growth in Europe, with rapid expansion notably in Iberia. Good growth in the corn herbicide DUAL/BICEP® II MAGNUM was partly offset by weakness in other corn herbicides owing to reduced applications. Sales of soybean herbicides grew significantly with increased acreage in the Americas and a continuing need for resistance management solutions. 

Insecticide sales grew by 7.1% to $934 million in the first half of 2014. Insecticide use in North America was also affected by the cold weather but sales grew strongly in all other regions, most notably in Latin America. The main drivers were ACTARA® and DURIVO®; the latter again saw sales growth of more than 50 percent. In EU countries the substitution of CRUISER® by FORCE® significantly boosted sales of this product.

In the first half of 2014, the sales of seed care dropped by 10.5% to $520 million. The two year suspension of neonicotinoid chemistry in the European Union reduced sales of seed care product CRUISER® by $32 million. Seed care sales were also affected by lower sales to other seeds companies in Latin America. These developments masked the ongoing success of the new SDHI seed treatment VIBRANCE® for use on cereals, soybean and canola. This product has now been launched in all regions and saw first half sales surpass $100 million.

Outlook

According to Syngenta CEO Mike Mack "In the second half of the year we expect an acceleration of sales growth driven by Latin America, where we see strong momentum for the launch of ELATUS™. On this basis we continue to expect full year integrated sales growth of around 6 percent at constant exchange rates. Profitability in the second half of the year will benefit from the non-recurrence of the seeds inventory write-down incurred in the second half of 2013. For the full year, earnings growth, together with a reduction in trade working capital as a percentage of sales, will underpin targeted free cash flow before acquisitions of around $1.3 billion."