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Syngenta reports Q3 sales of $2.5b

Syngenta's reported group sales of $2.5 billion for third quarter were down 3% at constant exchange rates compared with 2015.

Syngenta's reported group sales of $2.5 billion for the third quarter were down 3% at constant exchange rates compared with the third quarter of 2015. Reported sales were also 3% lower, with the dollar broadly stable against major selling currencies. For the first nine months of 2016, sales declined 3% at constant exchange rates to $9.6 billion.

Excluding the impact from the change in sales terms in Brazil, sales at constant exchange rates were up 2% in the quarter and were unchanged in the first nine months.

Regional sales of $2.4 billion were 4% lower at constant exchange rates, the company reported.

Volumes were 7% lower. Prices were 3% higher, driven by increases in Brazil and in the Commonwealth of Independent States (CIS) to offset prior-year local currency depreciation.

Sales in Europe, Africa and the Middle East rose by 8%, benefiting from robust fungicide sales and successful seedcare campaigns. Growth in seeds reflected good performances for cereals in north Europe and sunflower in southeast Europe. For the first nine months, regional sales were up 3%, despite adverse weather conditions in the second quarter.

In North America, the company said, growth of 11% was driven by selective herbicides, reflecting the continuing success of Syngenta's weed management solutions. Non-selective herbicides sales were down, largely due to the deliberate reduction in solo glyphosate. Corn and soybean seeds sales were higher, as end-of-season closing adjustments were below last year's level.

Sales in Latin America were 21% lower. Excluding the change in sales terms, sales were 10% lower. In Brazil, volumes continued to be affected by high levels of insecticide inventories, with pest pressure remaining low and increased soybean trait adoption. In Argentina, with the improved market environment, Syngenta registered double-digit growth.

Asia Pacific recorded a 22% sales increase, helped by the ending of El Niño conditions and a better monsoon in South Asia. Demand for crop protection products was strong, particularly for fungicides in the Association of Southeast Asian Nations (ASEAN) and insecticides in South Asia. Seeds sales were driven by high demand for conventional corn in South Asia and for genetically modified hybrids in the Philippines.

Growth in selective herbicides was largely driven by North America, where sales of ACURON almost tripled: For the first nine months, sales of this product exceeded $200 million. Sales of non-selective herbicides were lower, largely due to the deliberate reduction in solo glyphosate in North America, which will be completed by year-end. Sales of fungicides in Brazil were negatively affected by the change in sales terms and the effect of the previous season's drought. This was partially offset by strong demand in ASEAN, notably for AMISTAR and SCORE. In the U.S., the successful launch of TRIVAPRO, a product based on SOLATENOL, continued. Insecticides sales were lower, with the volume reduction in Brazil partially offset by growth in South Asia. Seedcare sales further increased compared with a strong quarter in 2015, driven by technology adoption in China and southeast Europe, the company reported.

Corn and soybean seeds increased in all regions, led by corn in Latin America and Asia. Diverse field crops sales were higher, with sunflower growth in southeast Europe and a good start to the planting season in Argentina. Vegetables were up 5% with strong hybrid performance in Mexico and in China.

Lawn and garden sales were up 3%, driven by solid volume growth for Pest Management and Vector Control solutions in all regions.

Erik Fyrwald, chief executive officer of Syngenta, said: “In a challenging year for the industry, it is encouraging to see strong uptake of our new technologies in a number of markets. This reflects the success of our (research and development) investments, which will continue to bring broad-based innovation to growers around the world.

“For the fourth quarter of 2016, we expect a continuation of the recovery in Asia Pacific and an improved performance in Latin America, with no further impact from the change in sales terms in Brazil," he added. "We confirm our full-year guidance of slightly lower sales at constant exchange rates, with a mid-single-digit decline in reported sales. The EBITDA (earnings before interest, taxes, depreciation and amortization) margin is expected to be around last year's level despite the non-recurrence of the $200 million trait revenue received in the fourth quarter of 2015. Our ongoing focus on working capital management should result in free cash flow for the year of over $1 billion."

Regarding Syngenta's acquisition by China National Chemical Corp. (ChemChina), Fyrwald said, “The transaction with ChemChina will ensure continuing choice and broad-based innovation for growers worldwide. The process of obtaining regulatory approvals is well underway, with (Committee on Foreign Investment in the U.S.) clearance and 11 antitrust approvals already received. In a context of industry consolidation, regulators in the (European Union) and elsewhere have recently requested a large amount of additional information, and we now expect the regulatory process to extend into the first quarter of 2017. ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure."

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