Syngenta’s profit drops slightly in 2010

Date:02-14-2011

Swiss agrochemicals giant Syngenta posted a slight drop in annual net profit, but said it was "confident" for 2011.

Net profit fell one percent from a year ago to $1.4 billion in 2010, although it was within analysts expectations. Sales were meanwhile up 6% at $11.6 billion over the period, thereinto, crop protection sales up 5% at $8.878 billion and seeds sales up 9% at $2.805 billion. Chief executive officer Mick Mack said the group expects "market share growth and expansion in emerging markets to support volume momentum" this year.

Syngenta crop protection sales by category ($ million)
	Full Year			4th Quarter
Product line	2010	2009	% Change	2010	2009	% Change
Selective Herbicides	2,308	2,221	+4	386	334	+16
Non-selective Herbicides	987	1,141	-13	163	180	-9
Fungicides	2,662	2,442	+9	671	632	+6
Insecticides	1,475	1,312	+12	438	317	+38
Seed Care	838	821	+2	267	243	+10
Professional Products	470	458	+3	131	141	-8
Others	138	96	+43	63	35	+78
Total	8,878	8,491	+5	2,119	1,882	+13

Selective Herbicides:  major brands AXIAL®, CALLISTO® family, DUAL®/BICEP® MAGNUM,  FUSILADE®MAX, TOPIK®

Volume growth was driven in particular by corn herbicides and more than offset lower prices.  The CALLISTO® family of products showed growth in all regions, with the main contribution coming from the USA, where early purchases in advance of the 2011 season were testimony to our strong market position.  Soybean herbicides also showed a good performance, reflecting their value in combating glyphosate-resistant weeds.

Non-selective Herbicides:  major brands GRAMOXONE®, TOUCHDOWN®

Sales were lower mainly due to lower prices for TOUCHDOWN®, in line with developments in the glyphosate market.  TOUCHDOWN® volumes, while slightly lower for the full year, recovered sharply in the second half with strong demand in Latin America.  GRAMOXONE® volumes also improved in the second half with good growth in Asia-Pacific. 

Fungicides:  major brands ALTO®, AMISTAR®, BRAVO®, REVUS®, RIDOMIL GOLD®, SCORE®, TILT®, UNIX® 

Growth in fungicides was driven by AMISTAR®, up 20 percent on the previous year.  The main driver was Latin America, where applications on soybean increased.  Our market share in Latin America was reinforced with the opening of new azoxystrobin capacity allowing us to satisfy growing demand.  In Asia Pacific AMISTAR® sales exceeded $100 million for the first time, with significant further potential as the product’s yield and vigor benefit are increasingly recognized.  Strong volume growth in North America almost offset lower prices in the region.

Insecticides: major brands ACTARA®, DURIVO®, FORCE®, KARATE®, PROCLAIM®, VERTIMEC®

The broad spectrum insecticide ACTARA®, used on multiple crops worldwide, continues to grow ten years after its launch; sales in 2010 increased by 25 percent.  Sales of the new product DURIVO® more than doubled with its expansion on rice and vegetables in a number of Asian markets and a successful launch on corn and soybean in Brazil.

Seed Care: major brands AVICTA®, CRUISER®, DIVIDEND®, MAXIM®

Seed Care showed strong volume growth particularly in emerging markets, where adoption of the technology is increasing.  Sales were lower in North America, where high channel inventories of treated seed and a competitive environment affected CRUISER® and MAXIM®.  This was offset by the introduction of AVICTA® on corn in the USA and by growth in Brazil.

Professional Products: major brands FAFARD®, HERITAGE®, ICON®

Improving consumer demand led to a recovery in the garden and ornamentals segments with new registrations in Europe also contributing to a strong performance in the region.  Turf sales were lower in a competitive North American market.

Syngenta crop protection sales by region ($ million)
	Full Year			4th Quarter
Region	2010	2009	% Change	2010	2009	% Change
Europe, Africa, Mid. East	2,649	2,667	-1	437	455	-4
NAFTA	2,383	2,567	-7	297	281	+6
Latin America	2,300	1,907	+21	1,000	842	+19
Asia Pacific	1,546	1,350	+15	385	304	+27
Total	8,878	8,491	+5	2,119	1,882	+13

Europe, Africa and the Middle East:  In Western Europe, sales recovered sharply in the second half of the year following a slow start to the season due to cold weather and high inventories in France.  Eastern Europe showed solid volume growth for the full year driven by Ukraine, where sales were up by almost 50 percent with accelerating investment in cereals in an improved credit environment.

NAFTA:  Sales were lower owing to price pressure originating with the high level of channel inventories at the start of the year.  However, volume growth in the second half was double digit and broadly based across product lines, as customers started to respond to higher crop prices. 
Penetration of corn fungicides was close to 2008 levels and our strong selective herbicide position was reinforced.

Latin America:  Sales growth was driven by strong product positioning and a favorable environment.  Soybean acreage expanded with increased disease pressure. A robust soybean price resulted in greater usage intensity and further success for our leading product PRIORI XTRA®, based on azoxystrobin.  Argentina saw particularly strong sales growth of 46 percent, with liquidity constraints easing, improved weather and a resumption of technology adoption, notably in Seed Care.

Asia Pacific:  Growth was broad-based across the region with an ongoing productivity drive in many emerging markets.   Sales showed a double digit increase in China, India and Vietnam with the rapid expansion of AMISTAR® and strong growth of Insecticides and Seed Care.  In developed markets, Australia had a good year with growth in all product lines; sales in Japan were unchanged.

Syngenta seeds sales by category ($ million)
	Full Year			4th Quarter
Product line	2010	2009	% Change	2010	2009	% Change
Corn & Soybean	1,281	1,210	+6	321	241	+33
Diverse Field Crops	524	429	+22	70	55	+28
Vegetables	663	594	+12	147	133	+10
Flowers	337	331	+2	62	53	+17
Total	2,805	2,564	+9	600	482	+24

Corn & Soybean: major brands AGRISURE®, GARST®, GOLDEN HARVEST®, NK®

Corn and soybean sales were up by 16 percent adjusting for the impact of advanced sales in the fourth quarter of 2009.  Fourth quarter growth, which was on a comparable basis, reflects strong early orders in the USA.  Evidence of Syngenta’s product performance and innovation is boosting growth in a buoyant market.  Full year sales expanded in all other regions, with particularly strong performances in Eastern Europe and Asia Pacific.

Diverse Field Crops:  major brands NK® oilseeds, HILLESHÖG® sugar beet

Diverse Field Crop sales increased significantly on good underlying growth supplemented by acquisitions, which added nine percent to sales.  Growth was particularly strong in Eastern Europe, with expansion in Russia and Ukraine on higher sunflower acreage.

Vegetables: major brands DULCINEA®, ROGERS®, S&G®, Zeraim Gedera

A strong start to the year accelerated in the second half, with all regions showing double digit growth.  In Europe, the expansion of fresh vegetable sales more than offset a decline in the processing market.  Growth in emerging markets was broad based, reflecting the breadth of the portfolio and increased demand for high quality produce.

Flowers: major brands GoldFisch®, Goldsmith Seeds, Yoder®

Flowers showed moderate growth in the two main regions of Europe and North America.  This reflected advances in genetics as well as some improvement in the economic environment.

Syngenta seed sales by region ($ million)
	Full Year			4th Quarter
Region	2010	2009	% Change	2010	2009	% Change
Europe, Africa, Mid. East	1,047	933	+12	127	115	+10
NAFTA	1,234	1,187	+4	286	213	+34
Latin America	275	243	+13	101	87	+17
Asia Pacific	249	201	+24	86	67	+29
Total	2,805	2,564	+9	600	482	+24

Outlook

Mike Mack, Chief Executive Officer, said: “As we enter 2011, we expect market share growth and expansion in emerging markets to support volume momentum as we implement our new commercial strategy.  We will be building on a strong foundation: global leadership in Crop Protection, now complemented by broad technology success in Seeds, and an unrivalled emerging market footprint.  By fully integrating our two businesses to address each crop holistically and with the mindset of a grower, we will create new business opportunities and value potential.

"Looking ahead, we are confident that our strategy will enable us consistently to outperform the market while showing increasing returns, reflected in our targets for market share growth, EBITDA margin progression and high cash flow return on investment.  In addition, the strength of our balance sheet will allow us to maintain our record of returning cash to shareholders while continuing to invest in growth areas.”