BASEL, Switzerland, July 26 /PRNewswire-FirstCall/ -- -- Sales 1 percent lower CER(1)at $5.2 billion -- Crop Protection sales unchanged(1) at $3.9 billion -- New product sales up 22 percent(1) to $646 million; AXIAL(R) and AVICTA(R) launches -- Development pipeline accelerating: Crop Protection, Seeds biotech traits -- Earnings per share(2) up 9 percent to $10.44 -- $889 million cash returned to shareholders Financial Highlights (unaudited) Excluding Restructuring As reported & Impairment under IFRS 1st Half 1st Half 1st Half 1st Half 2006 2005 Actual CER(1) 2006 2005 $m $m % % $m $m Sales 5201 5386 - 3 - 1 5201 5386 Net Income(3) 1056 976 + 8 961 912 Earnings per Share $10.44 $9.54 + 9 $9.51 $8.92 (1) Growth at constant exchange rates, see Appendix A. (2) EPS on a fully-diluted basis, excluding restructuring and impairment. (3) Net income attributable to shareholders of Syngenta AG. Michael Pragnell, Chief Executive Officer, said:
“In the first half of 2006 Syngenta performed well. Crop Protection outperformed in challenging northern hemisphere markets where fungicide demand was lower. New products maintained their outstanding record of growth, augmented by the successful launches of AXIAL(R) and AVICTA(R). Professional Products growth accelerated with strong performances in all three businesses. In Seeds, growth was achieved in all businesses with the exception of NAFTA corn due to production-related issues in the first quarter. We also made significant strategic progress: two acquisitions in Lawn & Garden and Vegetables Seeds respectively, a product technology exchange in Crop Protection and a marketing and technology agreement with Pioneer in US corn and soybean seeds. Continued cost discipline enabled us to offset the impact of higher oil-related costs while targeting expenditure to drive future growth, maintaining key performance ratios and increasing earnings.”
Highlights for 2006
Sales at constant exchange rates (CER) were one percent lower. Crop Protection sales* were unchanged; Seeds sales were four percent lower.
* Crop Protection sales include $36 million of inter-segment sales.
EBITDA was unchanged (CER) at $1.54 billion as operational efficiency savings offset the impact of higher oil-related costs ($82 million) and funded increased marketing and development expenditure in fast-growing areas of the business.
Earnings per share, excluding restructuring and impairment, were up nine percent to $10.44, benefiting from higher operating income and a reduction in net financial expense helped by currency exchange gains. After charges for restructuring and impairment, earnings per share were $9.51 (2005: $8.92).
Currency: Sales were negatively impacted by two percent due to the relative strength of the US dollar, notably against the Euro. The net impact on EBITDA was one percent.
Crop Protection: Sales in NAFTA were slightly lower mainly as a consequence of lower fungicide sales for soybean rust and reduced corn acres. Double-digit growth was again achieved in Eastern Europe which partially offset a decline in western Europe due to reduced fungicide consumption in cereals and the ongoing impact of subsidy reform. Broad-based sales growth in Asia Pacific was mainly driven by a strong performance in south east Asia. In Latin America, sales increased as a result of effectively combining risk management with successful marketing programs. Sales of new products, notably the CALLISTO(R) family and ACTARA(R) again delivered strong growth. AXIAL(R) was launched successfully in Europe and North America; its strong market reception resulted in an increased peak sales target of over $200 million. EBITDA was unchanged (CER) at $1.32 billion.
Professional Products: Sales increased 18 percent as all three businesses: Seed Care, Lawn & Garden and Home Care made important contributions. The main driver was Seed Care where the insecticide CRUISER(R), once again, delivered strong US growth; in addition, AVICTA(R) was launched successfully on cotton in the USA. Performance was also strong in Lawn & Garden, notably Ornamentals; this business was augmented in July by the acquisition of Conrad Fafard, Inc., a leading North American growing media company.
Seeds: Sales increased in all regions with the exception of NAFTA where production-related issues in US corn in the first quarter resulted in lower sales. An important strategic alliance was agreed with Pioneer to create the joint venture, GreenLeaf Genetics, broadening the germplasm and traits offer to independent seeds companies in the USA. In Vegetables, demand for fresh produce continued to grow and the acquisition of Emergent Genetics Vegetable A/S was completed, further expanding the product offer. Sales in Flowers rose slightly. Diverse Field Crops maintained growth momentum driven primarily by demand for oil crops in Eastern Europe. EBITDA was four percent lower (CER) at $275 million.
R & D Pipeline: In Crop Protection, good progress was made in the development pipeline including the in-licensing of the novel insecticide Rynaxypyr(TM) from DuPont. With peak sales potential of more than $200 million, this product is targeted for launch in 2008. In addition, two fungicides 520 and 524, passed important milestones and were advanced into late development. In Seeds, the development of a complete range of stacked input traits in corn is on track for 2008. In addition, from 2008 the company aims to launch a number of second generation traits including: corn amylase for enhanced bioethanol production; Optimum(TM) GAT(TM) herbicide-resistant trait in soybean, licensed from Pioneer; lepidoptera insect control in corn; and drought tolerant corn.
Operational efficiency: Total restructuring and impairment charges during the period were $130 million (cash: $70 million; non-cash: $60 million) largely relating to the program to streamline global operations, announced in February 2004. Savings in the first half were $106 million and peak savings of $425 million are expected by the end of 2008. Restructuring costs are expected to be around $850 million between 2004 and 2008 including non-cash charges of $350 million.
Cash flow and balance sheet: The ratio of average trade working capital as a percentage of sales was higher at 42 percent (2005: 39 percent) due to an increase in inventories. Fixed capital expenditure of $81 million was below depreciation of $109 million.
Taxation: The underlying tax rate for the period was 22 percent (2005: 24 percent). The tax rate is expected to remain in the low twenties over the medium term.
Cash return to shareholders: The company continued its share repurchase program in the first half of 2006, repurchasing 3.3 million shares through the put option structure announced in February; a total dividend of $260 million was paid on 11 July in the form of a nominal value reduction. The total returned to shareholders to date in 2006 is $889 million; since May 2004 total cash returned is $1.6 billion. The 2.3 million shares repurchased in 2005 were cancelled on 6 July.
Outlook
Michael Pragnell, Chief Executive Officer, said:
“Looking ahead, we see numerous opportunities to capture growth across all our businesses. Continuing market share gains and the exciting potential of the pipeline in Crop Protection, the increasing promise of our biotechnology traits in US corn seeds and the further expansion of Professional Products, coupled with continued cost discipline, reinforce our confidence in targeting double digit growth in earnings per share* through 2008.”
* Fully diluted, before restructuring, impairment and share repurchase program. Crop Protection
For a definition of constant exchange rates, see Appendix A. 2005 product line and regional sales have been restated to include inter-segment sales.
Half Year Growth 2nd Quarter Growth Product line 2006 2005 Actual CER 2006 2005 Actual CER $m $m % % $m $m % % Selective herbicides 1313 1351 - 3 - 1 703 736 - 5 - 5 Non-selective herbicides 422 391 + 8 + 8 255 228 +12 +11 Fungicides 1065 1201 -11 - 8 526 605 -13 -12 Insecticides 602 601 - + 3 307 296 +4 + 5 Professional products 490 419 +17 +18 246 191 +29 +29 Others 24 24 - 2 + 2 7 0 - - Total 3916 3987 - 2 - 2044 2056 - - Selective Herbicides: major brands AXIAL(R), CALLISTO(R) family, DUAL(R)/BICEP(R) MAGNUM, ENVOKE(R), FUSILADE(R)MAX, TOPIK(R)
Sales of the CALLISTO(R) family continued to grow in NAFTA offsetting the impact of lower corn acres in the USA and also showed good growth across Europe. AXIAL(R) was launched successfully in the USA, Canada, UK, Germany and Australia. Growth in Latin America largely offset slightly lower sales in NAFTA, in comparison with a strong first half in 2005.
Non-selective Herbicides: major brands GRAMOXONE(R), TOUCHDOWN(R)
TOUCHDOWN(R) registered double digit growth, driven by an expanded product range in the USA and market share gains in Argentina. GRAMOXONE(R) performed well in Latin America and in Asia, with a successful launch of the INTEON(R) formulation in South Korea and good growth in other south east Asian markets.
Fungicides: major brands AMISTAR(R), BRAVO(R), RIDOMIL GOLD(R), SCORE(R),
TILT(R), UNIX(R)
Fungicides were lower primarily due to limited advance purchases of soybean rust products in the USA. Sales in Europe were also lower as cold weather reduced consumption in cereals; market position was, however, reinforced through the introduction of new BRAVO(R)/triazole combinations to combat septoria resistance. Sales were higher in Brazil.
Insecticides: major brands ACTARA(R), FORCE(R), KARATE(R), PROCLAIM(R),
VERTIMEC(R)
ACTARA(R) and PROCLAIM(R) continued their growth trend. FORCE(R) performed well and gained share in the chemical corn rootworm market in the USA. Growth was registered in most regions, notably Asia and Eastern Europe.
Professional Products: major brands AVICTA(R), CRUISER(R), DIVIDEND(R),
HERITAGE(R), ICON(R), MAXIM(R)
Growth was achieved in all businesses: Seed Care, Lawn & Garden and Home Care. The main driver was Seed Care, with the successful launch of AVICTA(R) on cotton. CRUISER(R) continued to expand rapidly on a number of crops, notably corn and soybean in the USA. In Lawn & Garden growth was driven by Ornamentals. Half Year Growth 2nd Quarter Growth Regional 2006 2005 Actual CER 2006 2005 Actual CER $m $m % % $m $m % % Europe, Africa & Middle East 1452 1569 - 7 - 2 708 751 - 6 - 4 NAFTA 1579 1582 - - 1 928 952 - 3 - 3 Latin America 327 307 + 6 + 6 145 115 +26 +26 Asia Pacific 558 529 + 5 + 8 263 238 +11 +12 Total 3916 3987 - 2 - 2044 2056 - -
Europe, Africa and the Middle East: Western European markets were affected by a late start to the season which reduced cereal fungicide usage and by the progressive implementation of subsidy reform. AXIAL(R) was launched successfully in the UK and Germany, generating strong grower demand. Eastern Europe continued its double-digit growth trend with a strong performance throughout the region.
In NAFTA sales were slightly lower due to a weaker farm economy, a decline in corn acreage and the non-recurrence of advance fungicide sales. These factors were largely offset by the strong performance of non-selective herbicides, insecticides, professional products, the continued success of new products notably CALLISTO(R), ACTARA(R), the launch of AXIAL(R) in cereals and in seed treatment CRUISER(R) and the launch of AVICTA(R) on expanded cotton acreage.
Latin America: Sales in the low season were higher due primarily to a strong performance in Brazil. The company increased share in Brazil through the expanded implementation of effective risk management and successful marketing programs. This resulted in a resilient performance in the face of lower farmer profitability arising from the appreciation of the Real.
Asia Pacific: Growth was widespread across the region with notable contributions from South East Asia, China, Australia and South Korea. The broad fungicide and insecticide portfolio continues to support expansion in the region in the major crops of rice and vegetables.
Seeds For a definition of constant exchange rates, see Appendix A. Half Year Growth 2nd Quarter Growth Product Line 2006 2005 Actual CER 2006 2005 Actual CER $m $m % % $m $m % % Corn & Soybean 708 791 -10 - 9 210 220 - 4 - 4 Diverse Field Crops 242 242 - + 6 83 84 - 1 - Vegetables & Flowers 370 376 - 2 + 2 181 184 - 1 - Total 1320 1409 - 6 - 4 474 488 - 3 - 2 Field Crops: major brands NK(R), GARST(R), GOLDEN HARVEST(R) corn and oilseeds, HILLESHOG(R) sugar beet
First quarter production-related issues in US corn accounted for the decline in Corn and Soybean sales; soybean sales were higher with gains in both volume and price. Diverse field crops performed well with strong growth in oilseeds in Eastern Europe.
Vegetables and Flowers: major brands S&G(R) vegetables, ROGERS(R)
vegetables, S&G(R) flowers
Vegetables maintained its record of steady growth with further expansion in the emerging markets of Latin America and Asia-Pacific. In the developed markets, demand for fresh vegetables continues to grow while the processing segment remains competitive. Branded Fresh Produce continued to make good progress with the launch of additional new products. Sales of S&G(R) flowers improved slightly in more stable market conditions.
Half Year Growth 2nd Quarter Growth Regional 2006 2005 Actual CER 2006 2005 Actual CER $m $m % % $m $m % % Europe, Africa & Middle East 516 540 - 4 + 3 173 181 - 4 - 2 NAFTA 717 792 -10 -10 252 261 - 4 - 4 Latin America 35 33 + 7 + 7 21 21 + 2 + 2 Asia Pacific 52 44 +19 +21 28 25 +15 +16 Total 1320 1409 - 6 - 4 474 488 - 3 - 2
Safe Harbor: This document contains forward-looking statements, which can be identified by terminology such as ‘expect’, ‘would’, ‘will’, ‘potential’, ‘plans’, ‘prospects’, ‘estimated’, ‘aiming’, ‘on track’ and similar expressions. Such statements may be subject to risks and uncertainties that could cause the actual results to differ materially from these statements. We refer you to Syngenta’s publicly available filings with the U.S. Securities and Exchange Commission for information about these and other risks and uncertainties. Syngenta assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors. This document does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer, to purchase or subscribe for any ordinary shares in Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on in connection with, any contract therefore.
Syngenta is a world-leading agribusiness committed to sustainable agriculture through innovative research and technology. The company is a leader in crop protection, and ranks third in the high-value commercial seeds market. Sales in 2005 were approximately $8.1 billion. Syngenta employs some 19,000 people in over 90 countries. Syngenta is listed on the Swiss stock exchange (SYNN) and in New York . Further information is available at http://www.syngenta.com.
Analyst/Investor Enquiries: Jonathan Seabrook (Switzerland) +41 61 323 7502 Jennifer Gough (Switzerland) +41 61 323 5059 Rhonda Chiger (USA) + 1 (917) 322 2569 Media Enquiries: Medard Schoenmaeckers / Guy Wolff (Switzerland) +41 61 323 2323 Sarah Hull (USA) + 1 (202) 628 2372 Share Registry Enquiries Urs-Andreas Meier +41 61 323 2095
Syngenta
CONTACT: Analyst, Investor Enquiries: Switzerland, Jonathan Seabrook,+41-61-323-7502, Jennifer Gough, +41-61-323-5059, USA, Rhonda Chiger,+1-917-322-2569, Media Enquiries: Switzerland, Medard Schoenmaeckers or GuyWolff, +41-61-323-2323, USA, Sarah Hull, +1-202-628-2372, Share RegistryEnquiries, Urs-Andreas Meier, +41-61-323-2095, all of Syngenta
Web site: http://www.syngenta.com//
