Syngenta AG (SYNN), the world’s largest maker of crop chemicals, said profitability may increase this year as the company raises prices to offset emerging-market currencies’ drop against the dollar.
Earnings before interest, taxes, depreciation and amortization as a proportion of revenue “will be slightly higher than last year,” Chief Financial Officer John Ramsay said in a phone interview. “It will depend on currencies, which could distort it.”
Exchange-rate moves may hurt full-year Ebitda by $100 million, double the reduction it forecast earlier, Basel, Switzerland-based Syngenta said today in a statement. First-quarter sales excluding currency effects rose 5 percent as volume increased 2 percent and the company raised prices by 3 percent. Product pricing will be “key” to succeeding in emerging markets, Ramsay said.
Chief Executive Officer Michael Mack, who became CEO six years ago, is turning a keener eye to cost and capital efficiency after U.S. corn seed inventory writedowns totaling $170 million forced Syngenta to scale back a profit target last year. An efficiency program announced in February will cut $1 billion in costs by 2018.
Syngenta rose as much as 1.9 percent to 342.80 Swiss francs, the highest intraday price since Jan. 24, and was trading up 1.5 percent as of 9:11 a.m. in Zurich. That pared the stock’s decline this year to 3.7 percent, valuing Syngenta at 31.8 billion francs ($36.2 billion).
The manufacturer has processes in place to make sure excessive seed production doesn’t happen again, as “basically we’ve been much more challenging on the decision-making process,” Ramsay said.
First-quarter sales, including currency shifts, rose 2.5 percent to $4.68 billion, Syngenta said. Revenue was in line with the prediction of six analysts surveyed by Bloomberg.
To contact the reporter on this story: Patrick Winters in Zurich at email@example.com
To contact the editors responsible for this story: Simon Thiel at firstname.lastname@example.org Tom Lavell, Thomas Mulier