Syngenta’s sales down 7% in Q1 2016

Syngenta’s group sales, including Lawn and Garden, decreased by 7% in the first quarter of 2016. The crop protection sales were down by 8% to $2,604 million, while seed business dropped by 4% to $979 million. The dollar remained strong for most of the quarter.

Regional sales

Integrated sales of $3.6 billion were unchanged at constant exchange rates. Volumes were two percent lower. Prices were two percent higher, driven in part by increases in the CIS to offset the impact of currency depreciation.

Sales in Europe, Africa and the Middle East rose by six percent at constant exchange rate compared with a strong first quarter in 2015. Growth was achieved despite subdued grower sentiment, notably in France, as a result of low crop prices. In the CIS further significant price increases were implemented while volumes also increased, driven in particular by sunflower seeds, fungicides and selective herbicides. Sales in South East Europe were also robust. In North America, sales were two percent lower. Seeds sales increased with a strong performance in corn, largely due to trait licensing revenue. Crop protection sales were lower, partly due to the deliberate reduction in glyphosate. Fungicides showed broad-based growth with a significant contribution from new products. Full year performance in crop protection will be driven by innovation, with 16 new products scheduled for launch.

Sales in Latin America were 12 percent lower at constant exchange rate. Excluding glyphosate and the change in sales terms implemented in 2015, sales were one percent lower. This is a resilient performance in the context of continuing credit constraints in Brazil and Argentina and delayed sales in Venezuela. In addition, insecticides sales were affected by low pest pressure and the consumption of prior year channel inventories.

In Asia Pacific sales were 10 percent lower at constant exchange rate as a number of countries continued to be affected by adverse weather effects resulting from El Niño. The rice market in Thailand remains depressed as rice stocks are drawn down and government support for growers is reduced. 

Product line sales

In Selective herbicides  the  new  corn  herbicide  ACURON™  had  another successful quarter  in  the  USA. A reduction  in  winter  wheat  acreage  in  North America  resulted  in  lower  sales  of  AXIAL®. In Europe, volumes and prices increased in both the CIS and South East Europe.  In Non-selective herbicides glyphosate  volume  was  broadly  flat  while  prices  continued  to  decline. GRAMOXONE® volumes were affected by drought conditions in ASEAN countries.

In Fungicides the expansion of SOLATENOL™ continued with new launches in North America. Fungicides growth in Europe, Africa and the Middle East partly offset declines in Latin America and in ASEAN. Insecticides sales were lower, due to continued low insect pressure in Latin America and in Asia Pacific, which more than offset growth in the northern hemisphere. Growth in Seedcare was driven by the SDHI fungicide VIBRANCE® in North America and by FORTENZA™, following recent launches in Canada and China. 

Sales of Corn and Soybean were lower due to a competitive environment for soybean in the USA, where acreage is expected to be slightly lower. Corn acres are expected to increase and US corn sales were significantly higher, helped by increased trait licensing revenue. This more than offset lower corn sales in Europe and Asia Pacific. Growth in Diverse field crops was driven by sunflower in the CIS where, in addition to higher acreage, sales reflected superior genetics and proven product performance. In Vegetables, lower sales in Europe, Africa and the Middle East were offset by expansion in Latin America and Asia Pacific, particularly South Asia.

Growth in Lawn and Garden was driven by vector control in Africa and the Middle East and by Turf and Landscape in the USA, with early sales in the golf course market.

Outlook

The new fungicides ORONDIS™ and SOLATENOL™ are now registered in the USA and Canada and are being sold for the 2016 season. SOLATENOL™ is also expected to be introduced in France for the 2016/2017 season, subject to registration. In addition, another new carboxamide (SDHI mode of action) fungicide ADEPIDYN™ is expected to be launched in Latin America South during the next planting season, subject to registration. ADEPIDYN™ and ORONDIS™ are the first launches from the new crop protection pipeline, which has a total peak sales potential of over $4 billion.

John Ramsay, Chief Executive Officer, said:  “For the full year, our target of maintaining sales at constant exchange rates is underpinned by the contribution of new products. We are continuing our focus on Accelerating Operational Leverage (AOL) and are on track to realize our raised 2016 target of $300 million in incremental savings. Profitability will further benefit from 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.

"Over recent months we have reviewed our integrated strategy in the light of our experience over the last five years. There have been many clear successes, notably in the emerging markets, and we will continue to pursue an integrated Syngenta – April 20, 2016 / Page 3 of 5 approach where it clearly adds value. Seeds are central to grower decision making and are indispensable to an integrated offer. We are however determined to improve the profitability of our Seeds business. We have a competitive and sustainable position in most crops but in certain areas are prepared to consider joint venture, acquisition or divestment options.”