Syngenta 2012 Half Year Results: Sustained sales and earnings growth

     Syngenta 2012 Half Year Results: Sustained sales and earnings growth

PR Newswire

BASEL, Switzerland, July 26, 2012

BASEL, Switzerland, July 26, 2012 /PRNewswire/ --

  o Sales $8.3 billion, up 7 percent; up 10 percent at constant exchange rates
    (CER)^1
  o Strong northern hemisphere performance
  o Corn seed sales up 47 percent

       o trait milestones reached, royalty recognition
       o strong underlying growth

  o EBITDA up 15 percent at CER
  o Net income $1.5 billion, up 5 percent
  o Earnings per share^2 $17.17, up 10 percent

                     Reported Financial Highlights
                     1^st Half 2012 1^st Half 2011 Actual CER1
                     $m             $m             %      %
Sales                8,265          7,702          + 7    + 10
Operating income     1,839          1,830          -
Net income^3         1,500          1,427          + 5
EBITDA               2,268          2,149          + 6    + 15
Earnings per share^2 $17.17         $15.60         +10

^1 Growth at constant exchange rates
^2 Excluding restructuring and impairment; EPS on a fully-diluted basis.
^3 Net income to shareholders of Syngenta AG (equivalent to diluted earnings
per share of $16.31).

Mike Mack, Chief Executive Officer, said:

"In the first half of 2012 we continued implementation of our integrated
strategy while again delivering double digit top line growth.  Sales were
strong in the key northern hemisphere season despite a cold start in Europe
followed by heavy rain in the second quarter.  An excellent performance in
North America reflected early plantings and widespread optimism for the season
coupled with strong demand for our resistance management offers.  Our
technology investments in corn traits resulted in market share gains in Latin
America and royalty income from third parties.  We continued to invest in
growing the business globally while delivering a substantial increase in
underlying profitability.

"Weather conditions in Europe and more recently North America have resulted in
sharp increases in crop prices.  This has again brought to the fore the
volatility frequently confronting growers.  The challenge of food production
is essentially a global one, but grower responses are driven by a multitude of
local influences and considerations.  The breadth of our toolbox allows us not
only to respond to but also inform the choices being made daily in farms
around the world.  The need for technology in agriculture was never greater
than it is today, and we believe that our integrated strategy can enhance the
value of that technology for customers and shareholders alike."

Financial highlights 1^st Half 2012

Sales $8.3 billion

Sales increased by 10 percent at constant exchange rates.  Sales volume
increased by six percent and prices were four percent higher.  Reported sales
growth was seven percent owing to the appreciation of the dollar against most
currencies.

EBITDA $2.3 billion

At constant exchange rates EBITDA increased by 15 percent and the EBITDA
margin (CER) was 29.1 percent (H1 2011: 27.9 percent).  The increase in
underlying profitability reflects the operational leverage from volume growth,
price increases and higher trait royalty recognition, accompanied by cost
savings largely from the integrated business model of $85 million.  This more
than offset the impact of higher raw material costs and a net $80 million
charge for the settlement of US litigation relating to the herbicide atrazine.

The reported margin was 27.4 percent including a negative currency impact of
$202 million.

Net financial expense and taxation

Net financial expense of $84 million was slightly higher than in 2011 ($67
million) reflecting an increase in the cost of balance sheet hedging.  The tax
rate was 16 percent; for the full year a rate in the range of 17 to 18 percent
is expected.

Net income $1.5 billion

Net income including restructuring and impairment was up five percent. 
Earnings per share, excluding restructuring and impairment, increased by 10
percent to $17.17.

Cash flow and balance sheet

Free cash flow of $(34) million reflected a seasonal build-up of working
capital in line with strong sales growth.  Average trade working capital as a
percentage of sales was further reduced to 36 percent from 37 percent in the
first half of 2011. Fixed capital expenditure including intangibles was $239
million (H1 2011: $193 million); for the full year 2012 capital expenditure in
the range of $650 to $700 million is expected.

Dividend and share repurchase

A dividend of CHF 8.00 per share (2011: CHF 7.00) was paid on May 2,
representing a total payout of $791 million.  In February the company
announced its plan to repurchase shares for an amount of around $200 million
in 2012.  Of this amount $4 million was purchased in the first half.

On July 10 the company canceled 636,750 shares relating to repurchases made in
2011.  The current number of shares in issue is 93,126,149.

Business Highlights 1^st Half 2012

                             Half Year   Growth       2^nd Quarter Growth
                             2012  2011  Actual CER   2012   2011  Actual CER
                             $m    $m    %      %     $m     $m    %      %
Europe, Africa & Middle East 3,008 2,924 + 3    + 9   1,249  1,327 - 6    + 2
North America                2,781 2,251 + 24   + 24  1,512  1,126 +34    + 35
Latin America                1,043 1,032 + 1    + 2   546    516   + 6    + 8
Asia Pacific                 997   1,026 - 3    - 1   467    504   - 7    - 4
Total integrated sales       7,829 7,233 + 8    + 11  3,774  3,473 + 9    + 13
Lawn and Garden              436   469   - 7    - 5   187    212   - 12   - 9
Group sales                  8,265 7,702 + 7    + 10  3,961  3,685 + 8    + 12

Integrated sales performance

  o Sales $7.8 billion, up 11%^(1)
  o Volume +7%, price +4%
  o EBITDA $2.2 billion (H1 2011: $2.1 billion)
  o EBITDA margin^(1) 29.9% (H1 2011: 28.8%)

(1) At constant exchange rates

Europe, Africa and the Middle East: The main areas of growth were the CIS, the
emerging markets of Central and South East Europe, and France.  In the first
quarter the portfolio was well positioned to benefit from increased planting
of spring crops following winter kill on more than seven million hectares of
cereals.  In France, a change in the law on credit terms moved sales from the
fourth quarter of 2011 into the first quarter; in addition, there was good
underlying growth in CALLISTO^® on corn and in fungicides, particularly
AMISTAR^® and ALTO^®. Growth continued in the second quarter although at a
slower rate, owing to the fact that spring crops demand less crop protection;
in addition, heavy rainfall in many countries inhibited growers' ability to
spray.  However the CIS, in particular, continued to perform strongly, with
the ongoing intensification of agriculture and a sharp increase in corn
herbicide usage in Ukraine.

North America: The success of integrated offers to combat insect and weed
resistance is apparent in the strength of crop protection sales, which was
sustained throughout the season.  Growth in seeds, which in the first quarter
was constrained by lower royalty income, benefited in the second quarter from
the recognition of around $200 million in revenue relating to the licensing
agreement with Pioneer, announced in 2010, for Syngenta's proprietary MIR604
corn rootworm trait.  This was accompanied by good underlying growth in corn;
soybean seed sales were lower due to an expected acreage shift and to the
ongoing transition to second generation herbicide tolerance technology.

Latin America: Sales advanced modestly in the low season despite the effect on
crop protection applications of severe drought in Argentina and southern
Brazil early in the year.  Seeds sales were driven by market share gains and
by the expansion of second season corn.  Syngenta's leading trait offer
including AGRISURE^®VIPTERA^® is well placed to benefit from increasing GM
penetration.  Sales of sunflower seeds are expanding rapidly in Argentina.  In
Brazil, the PLENE^® sugar cane plant at Itapolis was formally opened in May
and commercial sales are underway.

Asia Pacific: Excluding the impact of  range rationalization in India and
Japan and the withdrawal of GRAMOXONE^® in South Korea, sales were up three
percent.  China and the emerging South East Asia markets showed good growth
across the business; sales in Australasia were lower owing to cold and wet
conditions.  Corn seed sales grew strongly and are increasingly being marketed
as part of a complete first 45-day solution for small-scale growers.

Lawn and Garden performance

  o Sales $436 million, 5% lower^(1)
  o EBITDA $58 million (H1 2011: $66 million)
  o EBITDA margin^(1) 13.9% (H1 2011: 14.1%)

(1) At constant exchange rates

Performance in the first half of the year reflected the continuing weakness of
the economic environment in Europe and the USA.  The flowers and consumer
segments were most affected; turf and landscape sales were slightly higher. 
The business strategy of delivering innovative solutions for professional
horticulturalists and consumers, combined with a rationalization of the
product range to focus on high value genetics and chemistry, is expected to
result in a significant improvement in the full year EBITDA margin over the
next three years to around 20 percent.

In June Syngenta announced the disposal of the Fafard peat unit to Sun Gro
Horticulture Ltd with immediate effect.  Fafard had sales of $88 million in
2011.

Crop pipelines: In May the first in a series of crop updates focused on
Cereals and Corn.  Increased pipeline targets for these two crops support the
combined total sales target for our eight key crops of over $22 billion
post-2015.  View the presentation using the link below: Cereals and Corn
Webcast Presentation.  These targets comprise growth in the existing portfolio
and the launch of new products, with an increasing emphasis on integrated
offers reflecting our new R&D and crop team structure.

New partnerships: Under a global agreement signed in April, Syngenta and
Novozymes will jointly commercialize the Novozymes technology JumpStart^®, a
seed-applied biological which increases phosphate uptake in the soil.  A six
year global license and research agreement with Devgen will enable the joint
development of new biological insect control solutions based on RNA
interference (RNAi) technology.  Under a barley breeding collaboration with
Intergrain, Syngenta will gain exclusive commercialization rights for all new
barley varieties, and exclusive rights to commercialize existing varieties in
the Intergrain portfolio outside Australia.

Integration update: All 19 territories are now commercially integrated,
enabling the sales force to offer a combined portfolio to the customer.  The
centralization of support services is already reaping cost efficiencies, and
these will accelerate with the ongoing realization of cost savings from the
new business model.  The global crop teams are fully established and are
working alongside the regional and R&D teams to develop new crop-based offers.

Performance metrics: Our aim is to gain an average 0.5 percent market share
annually across the combined business over the next five years.  We target a
group EBITDA margin in the range of 22-24 percent by 2015 and aim to continue
to deliver Cash Flow Return on Investment in excess of 12 percent.  We target
a continuous increase in the dividend as the primary form of cash return to
shareholders.  We will also execute share buybacks on a tactical basis.

Outlook

Mike Mack, Chief Executive Officer, said:

"After a strong first half volume performance in the northern hemisphere and
the achievement of targeted price increases, the focus of our business is now
Latin America where the outlook is positive given record soybean prices, our
leadership position and advances in our integrated portfolio.  Currency
headwinds are likely to diminish in the second half and we will realize
further cost savings.  For the full year, we expect an increase in EBITDA
margin at constant exchange rates and substantial free cash flow generation."

Crop Protection

                         Half Year   Growth       2^nd Quarter Growth
Crop Protection          2012  2011  Actual CER   2012   2011  Actual CER
by product line          $m    $m    %      %     $m     $m    %      %
Selective herbicides     1,922 1,747 + 10   + 13  1,010  920   + 10   + 14
Non-selective herbicides 597   565   + 6    + 8   363    315   + 15   + 19
Fungicides               1,732 1,729 -      + 3   831    848   - 2    + 3
Insecticides             872   858   + 2    + 5   410    428   - 4    -
Seed care                484   430   + 13   + 15  170    173   - 1    + 3
Other crop protection    67    54    + 26   + 29  29     30    -      + 5
Total                    5,674 5,383 + 5    + 8   2,813  2,714 + 4    + 8

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

Both North America and Europe registered double digit growth throughout the
season.  The corn herbicide portfolio grew strongly in the USA reflecting its
success in managing resistant weeds as well as higher corn acres.  Sales of
the CALLISTO^® family also expanded across Europe, most notably in France. 
AXIAL^® in cereals grew strongly in all regions, with the largest contribution
coming from Canada, where increased acreage coincided with low channel
inventories at the start of the season.

Non-selective herbicides:  major brands GRAMOXONE^®, TOUCHDOWN^®

Growth was driven by TOUCHDOWN^®, which registered volume growth of close to
30 percent in both North and Latin America.  In North America, sales reflected
higher US corn acres and a shortage of generic glyphosate which encouraged a
shift to branded products.  Similarly in Latin America, growth reflected good
product positioning as well as higher soybean acres in the 2011/12 season.

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

Fungicides achieved modest growth despite a first quarter decline in Latin
America owing to drought.  Although wet weather in Europe in the second
quarter prevented some applications, overall sales were higher thanks to a
strong performance by AMISTAR^® and ALTO^® in France. The new product
SEGURIS^® (isopyrazam) is growing rapidly on wheat in the UK, with sales up by
around 50 percent, and has now been launched in several other countries. 
Fungicide adoption in South East Asia drove good growth in the Asia Pacific
region, despite a decline in Australasia.

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

Excluding the impact of range rationalization in Japan and India, sales were
up eight percent, driven by a very strong performance in North America.  A
mild winter and early dry weather in the USA created heavy insect pressure in
a number of areas.  Sales of FORCE^® increased by almost 70 percent in the USA
as grower awareness of corn rootworm resistance increased and the benefits of
soil-based insecticides gained renewed recognition.

Seed care: major brands AVICTA^®, CRUISER^®, DIVIDEND^®, MAXIM^®, VIBRANCE^TM

Sales grew strongly led by CRUISER^®, which continued to expand in all
regions.  Growth in North America reflected a strong performance on spring
cereals, while in Latin America there is increasing recognition of the vigor
effect.  Emerging market adoption continues to increase (Russia, China). 
Sales of the nematicide AVICTA^® quadrupled in Latin America, where the
product is sold as part of the integrated soybean offer.  VIBRANCE™, first
launched in Argentina in 2011, received a US registration.

                          Half Year   Growth       2^nd Quarter Growth
Crop Protection           2012  2011  Actual CER   2012   2011  Actual CER
by region                 $m    $m    %      %     $m     $m    %      %
Europe, Africa, Mid. East 2,132 2,093 + 2    + 8   966    1,009 - 4    + 4
North America             1,739 1,447 + 20   + 21  955    813   + 17   + 18
Latin America             926   934   - 1    + 1   497    470   + 6    + 8
Asia Pacific              877   909   - 4    - 2   395    422   - 7    - 4
Total                     5,674 5,383 + 5    + 8   2,813  2,714 + 4    + 8

Seeds

                    Half Year   Growth       2^nd Quarter Growth
Seeds               2012  2011  Actual CER   2012   2011  Actual CER
by product line     $m    $m    %      %     $m     $m    %      %
Corn & Soybean      1,268 962   + 32   + 34  561    328   + 71   + 74
Diverse Field Crops 549   515   + 7    + 11  193    218   - 11   - 7
Vegetables          378   398   - 5    - 1   216    221   - 3    + 3
Total               2,195 1,875 + 17   + 20  970    767   + 27   + 30

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

Growth in sales was driven by corn and included around $200 million in
additional royalty income in North America.  Excluding this amount sales rose
by 12 percent globally and by five percent in North America, where the trait
portfolio continues to develop: in June registration was received for a
refuge-in-a-bag offer which will be launched at the end of the year. 
Latin America sales were also up strongly reflecting the launch of new trait
combinations and successful expansion in the second season corn market.  In
Europe growth was driven by the expansion of corn acres and of the portfolio
in the CIS and South East Europe.

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

Growth in the first quarter was driven by the move to spring crops,
particularly in the emerging markets of eastern Europe, which favored
Syngenta's leading sunflower portfolio.  A slower second quarter performance
was partly due to withdrawal from the sorghum business in North America.

Vegetables: major brands DULCINEA^®, ROGERS^®, S&G^®

In 2012 the Vegetables business has experienced some effect from the difficult
economic environment particularly in Europe, with consumers reining back
expenditure on premium fresh produce.  In North America, however, the
processing market has recovered from a period of over-supply and fresh produce
sales are benefiting from strong demand for miniature watermelons.

                          Half Year   Growth       2^nd Quarter Growth
Seeds by region           2012  2011  Actual CER   2012   2011  Actual CER
                          $m    $m    %      %     $m     $m    %      %
Europe, Africa, Mid. East 889   842   + 6    + 11  284    320   - 11   - 4
North America             1,053 810   + 30   + 30  557    313   + 78   + 78
Latin America             132   104   + 28   + 29  56     51    + 11   + 12
Asia Pacific              121   119   + 2    + 9   73     83    - 12   - 4
Total                     2,195 1,875 + 17   + 20  970    767   + 27   + 30

Announcements and Meetings

Crop update                          September 24-26, 2012
Third quarter trading statement 2012 October 23, 2012
Full year results 2012               February 06, 2013
First quarter trading statement 2013 April 18, 2013

Syngenta is one of the world's leading companies with more than 26,000
employees in over 90 countries dedicated to our purpose: Bringing plant
potential to life.  Through
world-class science, global reach and commitment to our customers we help to
increase crop productivity, protect the environment and improve health and
quality of life.  For more information about us please go to www.syngenta.com.

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terminology such as 'expect', 'would', 'will', 'potential', 'plans',
'prospects', 'estimated', 'aiming', 'on track' and similar expressions. Such
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actual results to differ materially from these statements. We refer you to
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Commission for information about these and other risks and uncertainties.
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solicitation of any offer, to purchase or subscribe for any ordinary shares in
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