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Syngenta Profit Misses Goal as Chief Targets $1 Billion Savings

Syngenta AG (SYNN), the world’s largest maker of crop chemicals, reported profit that missed analysts’ estimates and Chief Executive Officer Mike Mack pledged to cut $1 billion in costs by 2018 to boost efficiency.

Earnings per share excluding one-time items fell 12 percent to $19.3, the Basel-based company said in a statement today. That compares with a $19.91 average prediction of analysts surveyed by Bloomberg.

After scaling back profit guidance in October, Chief Executive Officer Michael Mack needs to show that his redesign of the company along crop lines three years ago is paying off. Demand in Latin America helped mitigate a writedown of U.S. corn seed inventories and currency expenses. The company said it expects to be at the lower end of its target range for profitability in 2015.

“We are determined to intensify our focus on cost and capital efficiency,” Mack said in the statement today. “Tangible benefits are already coming from leveraging a combined sales force, which has produced clear gains in a number of territories, with increasing acceptance of our integrated offers in the field.”

Mack, who became chief in 2008, has seen Syngenta shares dip 11 percent this year, more than competitors Monsanto Co. (MON) and DuPont Co. (DD) which have dropped 8.5 percent and 5 percent respectively.

New Margin Targets

Sales at the Swiss maker of Cruiser and Celest agrochemicals rose 3 percent to $14.7 billion, short of the $14.9 billion predicted. The company said it will propose a dividend of 10 Swiss francs ($11), an increase of 5 percent.

Syngenta said it’s on track to meet growth objectives for 2015. It has forecast an earnings before interest, taxes, amortization and depreciation margin of 22 to 24 percent in 2015, and $25 billion in sales in 2020.

The new program, to be completed by 2018, should push profitability to 24 percent to 26 percent, the company said today.

Dow CEO Andrew Liveris said Jan. 29 that his AgroSciences division has the potential to boost margins by as much as 400 basis points, after fourth-quarter revenue rising 13 percent to a record.

To contact the reporters on this story: Andrew Noel in London at anoel@bloomberg.net; Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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