Syngenta AG (SYNN), the world’s largest maker of agricultural chemicals, plans to raise prices in the “mid-single-digit” range for the 2012 season to counter soaring raw-material costs.
The increases would more than compensate for higher expected costs, Chief Financial Officer John Ramsay said today in a telephone interview. The company reported first-half earnings before interest, taxes, depreciation and amortization of $2.15 billion. JPMorgan analysts Neil Tyler and Martin Evans had predicted $2.35 billion.
“We are looking at opportunities considering the positive price environment, Ramsay said. ‘‘We have committed to targets across the group. This isn’t something we’ve pulled out of the air, it’s backed up by quite a lot of work.”
Ramsay said there are “real prospects of inflation” for the coming season. Rising costs led to a deterioration in crop protection margins to 29.3 percent from 31.5 percent. Syngenta said today that it is ahead of schedule in integrating its crop protection and seeds business, a move that should enhance sales and cut costs.
The maker of Revus fungicide is little changed this year in Zurich trading for a market value of 25.7 billion Swiss francs ($31.3 billion). The stock fell 1.7 percent to 269.5 Swiss francs as of 9:18 a.m., as the wider Swiss market climbed. Monsanto has advanced 8.8 percent this year, a similar gain to DuPont Co.
"The rising cost of expanding into new markets, increasing generic competition and lack of industry pricing power remain significant threats,’’ Tyler, Evans and colleague Hella Zouiten said in a note.
Chief Executive Officer Mike Mack aims to save about $650 million by 2015 by improving procurement and supply chain efficiency as well as bundling together marketing costs. Earlier this year, he embarked on a complete redesign of the company, aligning operations under specific crops to offer farmers of soya and corn a total package of products from the relevant seeds to pesticides.
Syngenta’s launch of its Agrisure Artesian corn trait, genetically modified to require less water, is coinciding with the worst drought in a century in parts of the U.S. The company sold out of an initial batch, and plans are to increase production to face off competition from Monsanto Co. (MON), Ramsay said.
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