Syngenta AG, the world’s largest crop-chemical company, said it has dropped some banks and customers in southern Europe and regularly brings cash out of the region in response to the deepening debt crisis.
A steering committee meets weekly for contingency planning for euro countries, with a focus on Greece, Italy, Portugal and Spain, Chief Financial Officer John Ramsay said. The measures, also taken in Ireland, include restricting sales to the most trusted buyers and collecting bills more rigorously. At the same time, the company is more prepared to offer discounts to ensure cash payments, he said.
“Over the last period, we have cut back on the number of customers we are dealing with, but we are committed to those that we are dealing with,” Ramsay said in the interview on June 8 at Syngenta’s headquarters in Basel.
Spain became the fourth country in the 17-member euro currency union to seek an emergency bailout on June 9, with emergency loans potentially totaling 100 billion euros ($126 billion) to shore up the banking system. Syngenta is applying what it learned from financial crises in Asia and Argentina to handle the credit crunch in Europe, Ramsay said.
Syngenta has annual sales of about $650 million to $700 million in Spain, Portugal and Italy combined, and less than $50 million in Greece, the CFO said. Worldwide revenue last year totaled $13.3 billion. The manufacturer is sweeping cash out of those countries and Ireland into its treasury pooling system after collecting it from farmers and distributors, he said.
“There are banks we were using two years ago that we are not now using,” Ramsay said, declining to name any. The agricultural-chemical maker has become “very careful about” working with certain banks in southern Europe, though can’t avoid the institutions entirely in high-revenue markets such as Spain and Italy, he said.
The company is pushing its marketing teams to “really choose their customers well,” and focus on “distributors who are committed to agriculture” and most likely to complete sales of Syngenta products, Ramsay said.