Syngenta Profit Falls on Lower North American Corn Acreage

Syngenta’s first-half profit took a hit from the late start to the North American season due to long winter, which reduced disease and insect pressure and the need for pre-emergent herbicide sprays.

Sales in the first half of 2014 edged up 1% to $8.51 billion, or 4% higher on a constant exchange rate basis. Net income dropped 1% to $1.39 billion from a year ago.

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“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,” said CEO Mike Mack. Growth in all other regions was robust, exceeding its full-year target rate of 6% at constant exchange rates. Emerging market sales increased by 11%, and pricing remained firm across the business.

Mack added, “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.”

Latin America showed the strongest growth in the period, increasing sales by 8%, followed by Europe, Africa and the Middle East with a 5% increase and Asia Pacific with a 4% increase. North American sales fell 7%.

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Syngenta noted that the CIS registered among the strongest growth rates, as volume expanded despite political uncertainty and significant price increases in Ukraine offset currency depreciation.

In Latin America, Syngenta said the pace of growth continued to improve despite dry conditions in Brazil and Argentina which reduced selective herbicide sales in the second quarter. “Infestation by the Helicoverpa caterpillar contributed to a significant increase in insecticide sales in Brazil, where fungicide sales also increased sharply,” the company added. In Venezuela, sales resumed following a payment delay at the end of 2013. Sales of both corn and soybean seeds increased.

In Asia Pacific, growth was strong in both developed and emerging markets, Syngenta said. Rainfall increased grower confidence in Australiasia, resulting in growth across the crop protection portfolio. South Asia saw strong growth in vegetables and a significant increase in corn seed sales. In China, sales of its Amistar technology continued to expand on rice and vegetables, Syngenta said.

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