Syngenta 2014 Half Year Results

                       Syngenta 2014 Half Year Results

PR Newswire

BASEL, Switzerland, July 23, 2014

BASEL, Switzerland, July 23, 2014 /PRNewswire/ --

  oSales $8.5 billion, up 1 percent: up 4 percent at constant exchange rates
  oLate start to North American season reduced crop protection use
  oStrong growth in all other regions

       oprice increases across the business

  oEBITDA $2.1 billion, 3 percent lower owing to currency movements

       oup 6 percent at constant exchange rates

  oEarnings per share^1 $15.60, 2 percent lower

                             Reported Financial Highlights
                             1^st Half 2014   1^st Half 2013   Actual   CER^2
                             $m               $m               %        %
Sales                        8,508            8,390            +1       +4
Operating income             1,725            1,792            - 4
Net income^3                 1,391            1,409            - 1
EBITDA                       2,111            2,179            - 3      +6
Earnings per share^1         $15.60           $15.92           - 2
^1 Excluding restructuring and impairment; EPS on a fully-diluted basis.
^2 Growth at constant exchange rates.
^3 Net income to shareholders of Syngenta AG (equivalent 1^st Half 2014
diluted earnings per share of $15.11).

Mike Mack, Chief Executive Officer, said:

"The pace of sales growth in the first half was held back by adverse weather
conditions in North America which, combined with a reduction in corn acreage,
significantly impacted the crop protection market. Growth in all other regions
was robust, exceeding our full year target rate of six percent at constant
exchange rates. Emerging market sales increased by 11 percent, with
performance clearly demonstrating the success of our integrated strategy.
Pricing remained firm across the business.

"Profitability was affected by the lower sales volume in North America and by
emerging market currency weakness. At constant exchange rates the EBITDA
margin increased, helped by price increases, lower seeds costs and savings
from our existing operational efficiency program. In February we announced a
comprehensive new program to accelerate operational leverage from 2015.
Project teams are working on the implementation of this program across the
company, and we are on track to deliver significant savings in production,
commercial operations and R&D. Our priority is to ensure that ongoing sales
growth is accompanied by improved profitability and strong cash flow
generation."

Financial highlights 1^st Half 2014

Sales $8.5 billion

Sales increased by 4 percent at constant exchange rates. The increase
reflected higher prices with volumes unchanged owing to the adverse weather in
North America; all other regions showed volume increases. The underlying rate
of price increase, excluding currency-related adjustments and glyphosate, was
just over 2 percent.

EBITDA $2.1 billion

EBITDA was 3 percent lower in reported terms but increased by 6 percent at
constant exchange rates. The EBITDA margin (CER) was 26.6 percent (H1 2013:
26.0 percent).

Net financial expense and taxation

Net financial expense at $100 million was slightly higher (H1 2013: $90
million) due to increased hedging costs associated with emerging market
growth. The tax rate was 15 percent (H1 2013: 18 percent).

Net income $1.4 billion

Net income including restructuring and impairment was 1 percent lower.
Earnings per share, excluding restructuring and impairment, were 2 percent
lower at $15.60.

Cash flow

Free cash flow before acquisitions was $(113) million compared with $(319)
million in H1 2013. Since the start of the year cash flow from inventory
reduction has had a favorable impact of $428 million compared with last year.
Average trade working capital as a percentage of sales was 42 percent (H1
2013: 37 percent) reflecting the increase in inventories in the second half of
2013. Inventories as a percentage of sales are expected to decrease by two
percentage points as the 2014 Latin American season progresses.

Fixed capital expenditure including intangibles was $312 million (H1 2013:
$274 million); for the full year capital expenditure of around $750 million is
expected.

Dividend and share repurchase

A dividend of CHF 10.00 per share (2013: CHF 9.50) was paid on May 7,
representing a total payout of $1,032 million. In the first half of the year
the company repurchased 136,000 shares for a total amount of $48 million, at
an average share price of CHF 322.60.

Balance sheet

In March Syngenta completed two bond issues as part of its normal funding
requirements and in order to further enhance its debt maturity profile. A EUR
750 million issue comprised a EUR 250 million Eurobond maturing in 2017 and a
EUR 500 million Eurobond maturing in 2021. A CHF 750 million Swiss domestic
bond issue comprised a CHF 350 million bond maturing in 2019, a CHF 250
million bond maturing in 2024 and a CHF 150 million bond maturing in 2029.

Business highlights 1^st Half 2014

                            Half Year   Growth      2^nd Quarter Growth
                            2014  2013  Actual CER  2014   2013  Actual CER
                            $m    $m    %      %    $m     $m    %      %
Europe, Africa, Middle East 3,336 3,165 +5     +7   1,241  1,229 +1     +2
North America               2,443 2,628 -7     -6   1,211  1,287 -6     -5
Latin America               1,269 1,174 +8     +11  674    606   +11    +14
Asia Pacific                1,096 1,057 +4     +10  538    532   +1     +7
Total integrated sales      8,144 8,024 +1     +4   3,664  3,654 -      +2
Lawn and Garden             364   366   -1     -    162    166   -3     -2
Group sales                 8,508 8,390 +1     +4   3,826  3,820 -      +2

Integrated sales performance

  oSales $8.1 billion, up 4%^1

       ovolume 0%, price 4%

  oEBITDA $2.0 billion (H1 2013: $2.1 billion)
  oEBITDA margin^1 26.8% (H1 2013: 26.2%)

^1 At constant exchange rates

Europe, Africa and the Middle East: An early start to the season led to
increased weed, disease and insect pressure contributing to a strong first
half performance. The slower pace of growth in the second quarter was
primarily due to the impact of lower spring plantings on seeds sales; crop
protection demand remained robust. In the first half all territories
registered growth in integrated sales, with the strongest growth rates coming
from the CIS and Iberia. In the CIS, volume growth was achieved despite the
political uncertainty and was augmented by significant price increases in
Ukraine to offset currency depreciation.

NorthAmerica: Prolonged cold temperatures delayed the start of the US season
until late May, reducing the level of disease and insect pressure as well as
the need for pre-emergent herbicide sprays. In Canada, demand in the second
quarter was affected by a reduction in cereals acreage and by flooding. In
addition, sales of low margin TOUCHDOWN^® were deliberately constrained, with
the aim of focusing on higher value mixture products to combat resistance.
Sales of corn and soybean seeds reflected the acreage shift in the USA and
overall were slightly higher.

Latin America: In Latin America, the pace of growth continued to improve
despite dry conditions in Brazil and Argentina which reduced selective
herbicide sales in the second quarter. TOUCHDOWN^® sales were also lower in
line with the re-focusing of this business. Infestation by the helicoverpa
caterpillar contributed to a significant increase in insecticide sales in
Brazil, where fungicide sales also increased sharply. In Venezuela, sales
resumed following a payment delay at the end of 2013. Sales of both corn and
soybean seeds increased.

Asia Pacific: Growth was strong in both developed and emerging markets. In
Australasia, rainfall increased grower confidence resulting in growth across
the crop protection portfolio. South Asia saw strong growth in protocols for
Vegetables and a significant increase in corn seed sales. In China, sales of
AMISTAR^® technology continued to expand on rice and vegetables.

Lawn and Garden performance

  oSales $364 million, unchanged^1
  oEBITDA $70 million (H1 2013: $77 million)
  oEBITDA margin^120.9% (H1 2013: 21.2%)

^1 At constant exchange rates

The late spring in North America also affected consumer demand for flowers,
while in Europe demand reflected the subdued economic environment in a number
of countries. Emerging markets however continued to expand rapidly, with
double digit sales growth in Latin America and Asia Pacific. The EBITDA
margin at constant exchange rates remained above the 20 percent target level
set for 2015.

Acquisitions

In April Syngenta acquired Societa Produttori Sementi (PSB), a leading Italian
durum wheat seed company. The acquisition will accelerate innovation in the
breeding and production of durum wheat for pasta.

In June Syngenta announced an agreement to acquire Lantmannen's winter wheat
and oilseed rape businesses in Germany and Poland. Through the acquisition
Syngenta will gain access to high quality germplasm, a seeds pipeline and
commercial varieties which complement the existing portfolio.

New partnerships

In April Syngenta announced an agreement with Cellulosic Ethanol Technologies,
LLC to license its ACE (Adding Cellulosic Ethanol) technology, a new process
for ethanol plants. ACE technology is being combined with Syngenta's
proprietary corn trait ENOGEN^®; production of cellulosic ethanol has already
commenced at the Quad County Corn Processors plant in Galva, Iowa.

In June Syngenta and Anheuser-Busch InBev (AB InBev) announced a partnership
to secure the sourcing of high quality malting barley for the beer industry.
The partnership will give growers access to agronomic support alongside the
best malting barley varieties, enabling them to achieve consistent yield and
quality increases. 

Outlook

Mike Mack, Chief Executive Officer said:

"In the second half of the year we expect an acceleration of sales growth
driven by Latin America, where we see strong momentum for the launch of
ELATUS™. On this basis we continue to expect full year integrated sales growth
of around 6 percent at constant exchange rates. Profitability in the second
half of the year will benefit from the non-recurrence of the seeds inventory
write-down incurred in the second half of 2013. For the full year, earnings
growth, together with a reduction in trade working capital as a percentage of
sales, will underpin targeted free cash flow before acquisitions of around
$1.3 billion."

Crop Protection

                         Half Year   Growth      2^nd Quarter Growth
Crop Protection          2014  2013  Actual CER  2014   2013  Actual CER
by product line          $m    $m    %      %    $m     $m    %      %
Selective herbicides     1,977 1,985 -      +2   922    974   -5     -3
Non-selective herbicides 790   746   +6     +10  485    444   +9     +13
Fungicides               1,917 1,783 +8     +8   913    857   +7     +7
Insecticides             934   872   +7     +10  421    392   +7     +9
Seed care                520   581   -11    -7   198    202   -2     +1
Other crop protection    73    50    +45    +46  28     23    +17    +19
Total                    6,211 6,017 +3     +5   2,967  2,892 +3     +4

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

Strong growth in Europe, Africa and the Middle East and in Asia Pacific more
than offset weather-related weakness in the Americas. The cereal herbicide
AXIAL^® continued to register double digit growth in Europe, with rapid
expansion notably in Iberia. Good growth in the corn herbicide DUAL/BICEP^® II
MAGNUMwas partly offset by weakness in other corn herbicides owing to reduced
applications. Sales of soybean herbicides grew significantly with increased
acreage in the Americas and a continuing need for resistance management
solutions.

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

TOUCHDOWN^® sales were lower as volumes in the Americas were deliberately
constrained on account of low profitability. Prices continued to rise but at
slower rate than in 2013. GRAMOXONE^® grew strongly in Latin America and Asia
Pacific, where usage is driven by the adoption of minimum-till farming
practices and the need to reduce reliance on hand weeding.

Fungicides: major brands ALTO^®, AMISTAR^®, BRAVO^®, ELATUS™, REVUS^®,
RIDOMILGOLD^®, SCORE^®, SEGURIS™, TILT^®, UNIX^®

The early start to the season in Europe led to higher disease pressure and
strong growth across the portfolio. Sales in Europe of the new SDHI fungicide
SEGURIS™were up by more than 60 percent. Latin America also saw a strong
fungicide performance despite dry conditions, with good consumption of PRIORI
Xtra^® pending the full launch of ELATUS™ in the second half of the year.
Fungicide sales were lower in North America owing to the late start to the
season.

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

Insecticide use in North America was also affected by the cold weather but
sales grew strongly in all other regions, most notably in Latin America. The
main drivers were ACTARA^® and DURIVO^®; the latter again saw sales growth of
more than 50 percent. In EU countries the substitution of CRUISER^® by FORCE^®
significantly boosted sales of this product.

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

The two year suspension of neonicotinoid chemistry in the European Union
reduced sales of CRUISER^® by $32 million. Seed care sales were also affected
by lower sales to other seeds companies in Latin America. These developments
masked the ongoing success of the new SDHI seed treatment VIBRANCE^® for use
on cereals, soybean and canola. This product has now been launched in all
regions and saw first half sales surpass $100 million.

                            Half Year   Growth      2^nd Quarter Growth
Crop Protection             2014  2013  Actual CER  2014   2013  Actual CER
by region                   $m    $m    %      %    $m     $m    %      %
Europe, Africa, Middle East 2,412 2,204 +9     +10  985    937   +5     +5
North America               1,745 1,884 -7     -6   953    994   -4     -2
Latin America               1,121 1,029 +9     +12  592    529   +12    +15
Asia Pacific                933   900   +4     +10  437    432   +1     +6
Total                       6,211 6,017 +3     +5   2,967  2,892 +3     +4
Seeds
                            Half Year   Growth      2^nd Quarter Growth
Seeds                       2014  2013  Actual CER  2014   2013  Actual CER
by product line             $m    $m    %      %    $m     $m    %      %
Corn and soybean            1,012 1,018 -1     +2   328    318   +3     +7
Diverse field crops         578   646   -10    -4   176    231   -23    -16
Vegetables                  376   390   -3     -3   203    223   -9     -9
Total                       1,966 2,054 -4     -1   707    772   -8     -5

Total seeds sales were one percent lower at constant exchange rates owing to
the divestment of the Dulcinea Farms fresh produce business in December 2013.
Adjusted for this divestment, seeds sales were up one percent.

Corn and soybean: major brands AGRISURE^®,GOLDEN HARVEST^®, NK^®

Sales were two percent higher despite the impact of lower corn acreage in the
USA and Brazil. North American corn seed sales were down four percent,
reflecting the acreage decline in the USA. Sales in both Latin America and
Europe were slightly higher. Asia Pacific saw double digit growth with the
continuing success of Syngenta hybrids based on tropical germplasm. Soybean
sales, which in the first half are almost entirely in the USA, showed double
digit growth, with the transition to RR2Y technology now complete.

Diverse field crops: major brands NK^® oilseeds, HILLESHOG^® sugar beet

Lower sales largely reflected market trends in Europe following an
exceptionally strong season in 2013. Sunflower acreage in the important South
East Europe area was down and in Ukraine some growers delayed planting owing
to the political uncertainty. In the USA, sales were affected by performance
issues in sugar beet.

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

Excluding the divestment of Dulcinea sales were five percent higher at
constant exchange rates. Europe, Africa and the Middle East continued to show
solid growth. Sales in North America were slightly higher after adjustment for
Dulcinea. Latin America and Asia Pacific generated good growth; a notable
performance came from South Asia, where programs to boost smallholder
productivity have enabled growers to increase marketable yield.

                            Half Year   Growth      2^nd Quarter Growth
Seeds                       2014  2013  Actual CER  2014   2013  Actual CER
by region                   $m    $m    %      %    $m     $m    %      %
Europe, Africa, Middle East 934   980   -5     -    259    294   -12    -7
North America               713   754   -6     -5   262    294   -11    -10
Latin America               153   160   -4     +1   84     82    +3     +4
Asia Pacific                166   160   +4     +12  102    102   +1     +9
Total                       1,966 2,054 -4     -1   707    772   -8     -5

The full version of the 2014 Half Year Results press release is available here
and a presentation illustrating the results will also be available by 07:30
(CET).

Change of auditor

The Annual General Meeting on April 29, 2014 approved the motion to elect KPMG
as auditor to Syngenta. KPMG replaced EY (formerly Ernst&Young), which held
the role since 2002.

Announcements and meetings

Third quarter trading statement 2014 October 16, 2014
Full year results 2014               February 4, 2015
First quarter trading statement 2015 April 17, 2015
Annual General Meeting               April 28, 2015

Syngenta is one of the world's leading companies with more than 28,000
employees in over 90countries 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.

Cautionary Statement Regarding Forward-Looking Statements

This document contains forward-looking statements, which can be identified by
terminology such as 'expect', 'would', 'will', 'potential', 'plans',
'prospects', 'estimated', 'aiming', 'on track' and similar expressions. Such
statements may be subject to risks and uncertainties that could cause the
actual results to differ materially from these statements. We refer you to
Syngenta's publicly available filings with the U.S. Securities and Exchange
Commission for information about these and other risks and uncertainties.
Syngenta assumes no obligation to update forward-looking statements to reflect
actual results, changed assumptions or other factors. This document does not
constitute, or form part of, any offer or invitation to sell or issue, or any
solicitation of any offer, to purchase or subscribe for any ordinary shares in
Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on
in connection with, any contract there for.

                                                    Analyst/Investor contacts:
Syngenta International AG   Media contacts:
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Media Office                Paul Barrett
                                                    Switzerland +41 61 323
CH-4002 Basel               Switzerland +41 61      5059
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Switzerland                                         USA +1 202 737 6521
                            
Tel: +41 61 323 23 23                               Lars Oestergaard
                            Paul Minehart
Fax: +41 61 323 24 24                               Switzerland +41 61 323
                            USA +1 202 737 8913     6793
www.syngenta.com
                                                    USA +1 202 737 6520

SOURCE Syngenta International AG

Website: http://www.syngenta.com
 
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