Syngenta’s agchem sales down 9% in Q3 2015

Syngenta’s group sales, including Lawn and Garden, decreased by 12% in the third quarter of 2015.The crop protection sales were down by 9% to $2,170 million, while seed business dropped significantly by 31% to $329 million. For the first nine months of 2015, sales decreased by 11 percent to $10.3 billion.

Regional sales

In Latin America sales were down 3 percent. In Brazil, the impact on the market of low commodity prices was exacerbated by the sharp depreciation of the Real in the quarter and by liquidity constraints. In Argentina, credit is also tight and growers continue to be penalized by export taxes on soybeans. The increase in sales is therefore due to the change in sales terms in Brazil, which means that a larger proportion of crop protection sales are recorded in the third rather than the fourth quarter. This positive effect was partly offset by the deliberate reduction in sales of glyphosate; net of both factors, regional sales were 8 percent lower.

In Asia Pacific sales were 17 percent lower with extended drought in the ASEAN countries and a weak monsoon in India. Although these seasonal factors affected volumes, price increases were sustained.

Sales in Europe, Africa and the Middle East were down 19% compared with a strong quarter in 2014. Crop protection sales benefited from a successful Seedcare campaign. In seeds, strong growth in cereals offset lower corn sales due to reduced acreage. In North America, crop protection sales were down reflecting the deliberate reduction in glyphosate and the phasing of selective herbicide sales linked to the introduction of ACURON™. Low commodity prices affected fungicide applications for crop enhancement. A strong performance in corn seeds was partly offset by a competitive soybean market with lower than expected acreage.

Product line sales

Sales of Selective herbicides were lower in Europe and North America due to dry weather and following a strong second quarter in the USA. Sales of ACURON in the USA are ramping up and are on track to exceed $100 million in the first year of launch. The decline in Non-selective herbicides reflected the deliberate reduction in solo glyphosate; GRAMOXONE® sales were also lower, with the drought in ASEAN reducing the need for weed control applications. The main growth driver for Fungicides was Brazil where, in addition to the change in sales terms, ELATUSTM saw strong underlying growth in its second year. Sales of Insecticides increased in all regions except Asia Pacific. Seedcare sales recovered after a weak first half, with a renewed Brazilian registration for AVICTA® on soybean.

Corn seed sales increased significantly in the USA in both the branded and Greenleaf Genetics business. This was more than offset by a decline in Soybean seed sales mainly due to the new Integrated Business Partner model in Brazil, which shifts sales to the distributor level but raises profitability. Diverse field crops sales were lower, with sunflower reductions in a number of markets.

Outlook

Mike Mack, Chief Executive Officer, said: "In the third quarter Latin America has been further affected by currency volatility in Brazil and by tight credit conditions. Although this means that performance in the region is unlikely to meet our original expectations for 2015, we are maintaining our market-leading position as well as our tight focus on risk management.

"For the full year, at constant exchange rates, we expect sales to be around last year's level and EBITDA to show a double digit increase. This reflects achievement of the targeted AOL savings, price increases in the CIS and an upfront payment in the fourth quarter on a new licensing agreement for our corn traits. Reported sales continue to be affected by the strength of the dollar, and reported EBITDA is likely to show a mid-single digit decline. Free cash flow, although below last year's level, is expected to be robust."