Syngenta half year sales up 14%

Syngenta’s agrochemical sales rose by 14% in the half year compared with the same period last year to $7.7 billion, but increased by 12% at constant exchange rates (CER). Crop Protection sales were up 10% (CER) to $5.6 billion, with 12% volume growth and a two percent reduction in price. Seeds sales increased by 17% to $2.1 billion, registered volume growth of 15% with prices two percent higher. At constant exchange rates, EBITDA increased by 10 percent with a margin of 28.3 percent compared with 28.6 percent in 2010.  The gross margin was maintained at constant exchange rates despite lower prices in Crop Protection; operating costs reflected further investments in growing the business. Net income increased by 14 percent to $1.43 billion.

Syngenta’s CEO said, "In the first half of 2011, growers in the Northern hemisphere faced familiar challenges, with unfavorable weather and volatile crop prices.  However, tight grain supply in a context of growing demand meant that the overall level of crop prices was high, encouraging increased investment in technology.  Our sales showed sustained volume momentum in all regions and were, in addition, driven by the breadth of our portfolio and our strong emerging market presence.  An improved price environment for Crop Protection was reflected in stable pricing in the second quarter.  In Seeds, strong growth across crops and the further enhancement of our US corn portfolio resulted in a substantial improvement in profitability.

Syngenta’s first-half results ($ million)
Business segment	1st Half 2011	1st Half 2010	% change
Crop Protection	5,634	4,996	+ 13
Seeds	2,092	1,763	+ 19
Net Income (1)	1,427	1,254	+ 14
EBITDA	2,149	1,927	+ 12
Earnings per share (2)	15.60	13.95	+ 12
Sales	7,702	6,740	+ 14
(1) Net income to shareholders of Syngenta AG. (2) Excluding restructuring and impairment; EPS on a fully-diluted basis.

Europe, Africa & the Middle East registered double digit volume growth in the first half despite the drought which hit several countries in the second quarter.  Growth was particularly strong in the CIS where weather conditions improved compared with last year and we offered an expanded range.  France also grew strongly with the launch of AXIAL® on cereals and the expansion of CALLISTO® and CRUISER® on increased corn acres.  In North America, volume growth offset a decline in herbicide prices notably in the first quarter.  Fungicide prices were stable and volume rose strongly with increased usage intensity.  Latin America has now seen double digit growth for six consecutive quarters.  Growth in the first half was led by insecticides, with further expansion in ACTARA® and the roll-out of AMPLIGO® (DURIVO® family).  A reduction in generic competition contributed to higher pricing.  Sales in Asia Pacific reflected our market-leading position and broad portfolio, with further impetus from high rice and cotton prices.  Sales were particularly strong in ASEAN and in China, where seed care sales on rice, cotton, corn and cereals are expanding rapidly.

Growth in Selective herbicides was concentrated in the emerging markets, notably the CIS and Central Europe.  AXIAL® was successfully launched in France and Iberia.  Sales of atrazine grew strongly in the Americas with lower imports of generic product.  Sales of Non-selective herbicides were broadly flat, with volume growth offsetting some further price weakness.  Fungicides showed growth in all regions, with a particularly strong performance in the USA where awareness of the crop enhancement effects of AMISTAR® is increasing.  Growth in Insecticides was broad-based with double digit increases in a number of products.  Seed care sales were boosted by the further expansion of AVICTA® and CRUISER® and by the success of MAXIM® in Europe.  In Professional products sales increased reflecting an improvement in the consumer segment in Europe and higher turf sales in Asia Pacific.

New products:  Sales of new products (defined as those launched since 2006) increased by 27 percent* to reach $386 million.  The main drivers were AVICTA®, up 72 percent, with expansion on soybean and cotton, and DURIVO®, rolled out on a number of crops and now sold in all regions.

Syngenta’s first-half results by region ($ million)
	1st Half 2011	1st Half 2010	% change
Europe, Africa & Middle East	2,922	2,390	+ 22
North America	2,254	2,127	+ 6
Latin America	1,038	891	+ 17
Asia Pacific	1,027	899	+ 14
Total	7,241	6,307	+ 15
Lawn & Garden	485	452	+ 7
Business Development	1	5	-
Inter business elimination	(25)	(24)	-
Total Syngenta	7,702	6,740	+ 14

Crop Protection segment’s results by category and region

Selective herbicide volumes were significantly higher, notably in Europe driven by AXIAL® on cereals and the corn herbicide CALLISTO®.  Growth in demand in the CIS was augmented by the successful integration of the Dow AgroSciences portfolio.  In North America, strong sales of atrazine reflected increased corn acreage and reduced generic competition.  TOPIK® sales were adversely affected by high opening channel inventories in Canada.  Pricing was positive in all regions with the exception of North America.

In Non-selective herbicides, volumes increased across all regions driven in particular by the use of GRAMOXONE® in Asia as an alternative to hand weeding.  TOUCHDOWN® volumes were also higher.  Pricing remained below last year with the exception of Brazil, where lower inventory levels are leading to price recovery.

Fungicides sales were 13 percent higher due to strong volume growth in all regions and slightly higher pricing.  North America volumes increased by almost 40 percent reflecting positive market sentiment and growers' desire to maximize yields through crop enhancement solutions, as well as an increased level of disease pressure.  Volumes in both the CIS and China were up strongly reflecting increased technology adoption.  AMISTAR® sales were up 21 percent globally with significant growth in North America and in Asia Pacific, where they were driven by growth in rice, fruit and vegetables as well as higher consumption in cereals.  The new fungicide SEGURIS® continued to grow with a UK launch on wheat.

Insecticides sales were up 19 percent with volume growth in all regions driven primarily by DURIVO® and ACTARA®.  Both Europe and Brazil saw significant sales growth linked to increased insect pressure.  DURIVO® sales were up 85 percent due to its continued roll out; growth in Asia Pacific was mainly driven by launches in vegetables, notably in China.  ACTARA® sales were largely driven by Latin America where we were able to capture significant share resulting from the replacement of organophosphates, as well as building on the success of ENGEO® launched in 2010.

Seed care sales were 13 percent higher reflecting strong growth in Europe and increased adoption rates in Asia Pacific, notably China.  CRUISER® sales in France more than doubled with expansion on corn and first sales on oilseed rape; further growth was generated through its expanded use on oilseeds in Central Europe and potatoes in Latin America.  AVICTA® sales were up in North America due to extended use on cotton; MAXIM® performed strongly in Europe.  VIBRANCETM seed treatment was launched in Argentina in May.

Professional products sales were six percent higher led by higher ornamentals sales in Northern Europe and increased demand in the golf and landscape market in Asia Pacific.

Syngenta’s Crop Protection segment’s sales by category ($ million)
Product line	1st Half 2011	1st Half 2010	% change	Q2 2011	Q2 2010	% change
Selective herbicides	1,747	1,620	+ 8	920	877	+ 5
Non-selective herbicides	565	548	+ 3	315	316	-
Fungicides	1,729	1,488	+ 16	848	681	+ 24
Insecticides	858	700	+ 23	428	349	+ 23
Seed care	430	369	+ 17	173	130	+ 33
Professional products	267	242	+ 11	139	122	+ 15
Others	38	29	+ 28	21	11	+ 78
Total	5,634	4,996	+ 13	2,844	2,486	+ 14

Syngenta’s Crop Protection segment’s sales by region ($ million)
	1st Half 2011	1st Half 2010	% change	Q2 2011	Q2 2010	% change
Europe, Africa, Mid. East	2,152	1,785	+ 21	1,041	827	+ 26
North America	1,568	1,544	+ 2	873	857	+ 2
Latin America	955	833	+ 15	480	419	+ 15
Asia Pacific	959	834	+ 15	450	383	+ 18
Europe, Africa, Mid. East	2,152	1,785	+ 21	1,041	827	+ 26
Total	5,634	4,996	+ 13	2,844	2,486	+ 14

Europe, Africa and the Middle East:  Sales were up 16 percent reflecting the successful launch of AXIAL® in France and Iberia.  Owing to adverse cereal growing conditions there was a shift from cereal to corn acreage resulting in a strong performance by CALLISTO® and DUAL GOLD® corn herbicides.  Weather conditions also increased the demand for insecticides with strong sales increases seen in ACTARA® and KARATE®.  Continued high commodity prices have encouraged farmers to secure yields through the use of fungicides:  AMISTAR® showed strong growth in the CIS and South East Europe; REVUS® performed strongly in Northern Europe.  Increased corn acreage boosted sales of seed care products.

In North America strong volume growth was offset by lower prices compared with the first half of 2010; however, prices were unchanged versus end 2010, and the second quarter showed a significant improvement compared with the first quarter.  In a context of high crop prices, growers are making significant investment in crop enhancement solutions to maximize yields, leading to significant growth in fungicides.  The largest contributor was AMISTAR® with volumes up 63 percent and prices up five percent.  Sales of cereal herbicides and non-selectives in Canada were lower.

Latin America:  Sales were up 14 percent driven in particular by growth in Insecticides.  Sales in ACTARA® were boosted by the substitution of organophosphates as well as by extended use in both sugar cane and cotton.  Growth was further enhanced by AMPLIGO® which was up significantly following last year's launch on fruit and vegetables.  Continued expansion of GM seed areas increased overall demand for TOUCHDOWN®.  The further growth in CRUISER® enhanced seed care sales.

Asia Pacific:  Asia Pacific saw a further significant volume increase driven by the continued roll out of the DURIVO® family across the region, with an initial launch of AMPLIGO® in China and continued ramp up in the Bangladesh and Vietnam rice markets.  AMISTAR® volumes continued to grow in China and across ASEAN reflecting enhanced positioning and continued high crop prices.   Strong volume demand for GRAMOXONE® was seen as channel inventories declined in several countries.

Seed segment’s results by category and region

Corn and Soybean sales increased 19 percent with growth across all regions.  Sales in North America were driven by our new multi-stack offer including Viptera™ and by increased licensing revenues.  In Europe a strong performance was seen primarily in Eastern Europe where corn acres increased following the drought in 2010 and high commodity prices incentivized increased acreage.  In Italy strong volumes reflected the positive response to our new integrated business model.  Growth in Latin America was largely driven by high commodity prices encouraging a shift towards GM hybrids.  In North America pricing was up in the first half reflecting the quality of the portfolio.

Diverse Field Crop sales were up by more than 30 percent reflecting an ongoing strong performance in the CIS.  Sunflower sales advanced in all major growing areas reflecting the quality of our portfolio and our market leader position in the high value segment.  Sugar beet sales in Europe increased due to the integration of the Maribo acquisition and were further augmented by additional tender business orders in Eastern Europe.  Sunflower also performed strongly in Latin America due to both volume growth and price increases.

Vegetables sales reflected significant volume growth in the CIS and South East Europe driven by attractive grower returns.  The focus in Eastern Europe was on high quality brassica segments.  Spain and the Middle East expanded through a number of our innovative tomato, pepper and melon varieties.  Latin America, China and India all saw strong growth in tomato and pepper.  North America sales were down due to a cautious market environment with high inventories of processed products.

Flowers sales were up one percent in the first half.  Europe, North America and North East Asia showed signs of an improving consumer environment.

Syngenta’s Seed segment’s sales by category ($ million)
Product line	1st Half 2011	1st Half 2010	% change	Q2 2011	Q2 2010	% change
Corn & Soybean	961	806	+ 19	327	253	+ 29
Diverse Field Crops	515	386	+ 33	218	193	+ 13
Vegetables	398	360	+ 10	221	200	+ 11
Flowers	218	211	+ 4	82	81	+ 1
Total	2,092	1,763	+ 19	848	727	+ 17

Syngenta’s Seed segment’s sales by region ($ million)
Product line	1st Half 2011	1st Half 2010	% change	Q2 2011	Q2 2010	% change
Europe, Africa, Mid. East	952	762	+ 25	359	297	+ 21
North America	911	811	+ 12	351	323	+ 9
Latin America	105	77	+ 36	52	37	+ 38
Asia Pacific	124	113	+ 10	86	70	+ 24
Total	2,092	1,763	+ 19	848	727	+ 17

Outlook

Mike Mack, Chief Executive Officer, said, "As we enter the second half of the year, a positive outlook for the main Latin American season starting in September is underpinned by favorable fundamentals.  We also expect further expansion in Asia Pacific and look forward to continuing strong growth in volumes with further gains in market share across the business.  We expect to generate 2011 full year free cash flow in excess of $1 billion.  In addition, the outlook for pricing for the rest of the year is positive and we expect stable pricing for the full year.  For the 2012 season, we are currently raising prices across the business with the aim of achieving an overall increase in the mid single digits.  This will enable us to offset the impact of inflation and to make further investments in the development of our integrated offer.

"We continue to target above-market growth while expanding the size of the market through crop-based innovation.  Our proven ability to manage manufacturing costs and to leverage our global presence will contribute to maintaining a high level of profitability.  Finally, we target Cash Flow Return on Investment in excess of 12 percent and a continuous increase in the dividend."