- Sales up 11 percent at $7.3 billion, +7% CER(1)
- Earnings per share(2) up 76 percent to $5.87
- Free cash flow(3) $623 million
- Dividend increased to CHF 2.70
- Cash return program enhanced to more than $1 billion 2004-2006
Financial Highlights
Excluding Restructuring, Impairment As reported under IFRS(4)
and Discontinued Operations(4)
2004 2003(5) Actual% CER(1)% 2004 2003(5)
$m $m $m $m
Sales 7269 6525 +11 +7 7269 6525
Operating
Income 895 684 +31 +34 541 521
Net Income(6) 762 340 +124 460 250
Earnings per
Share $7.19 $3.34 +115 $4.34 $2.45
Earnings per
Share
before
one-off
tax credit $5.87 $3.34 +76 $3.02 $2.45
(1) For a definition of constant exchange rates, see Appendix A.
(2) EPS on a fully-diluted basis, excluding restructuring, impairment and
discontinued operations, and before a one-off tax credit.
(3) After acquisitions of $484 million. For a definition of free cash
flow, see Appendix C.
(4) The amounts including restructuring and impairment are reported in
accordance with International Financial Reporting Standards (IFRS).
The impact of restructuring, impairment and discontinued operations
in 2004 is $302m on net income (2003: $90m).
(5) Adjusted in accordance with recent changes in accounting standards.
(6) Net income to shareholders of Syngenta AG.
Heinz Imhof, Chairman, said:
"The results achieved in
2004 amply demonstrate the success of the
Syngenta strategy and
strength of the product portfolio, which have allowed the
company to generate significant, profitable growth. They
also bear witness to the hard work and determination of our
employees in the first four years of the company's life. Our
commitment to create value for our shareholders is further
reinforced by the announcement of an enhanced cash return
program."
Michael Pragnell, Chief
Executive Officer, said:
"In 2004, Syngenta
delivered growth across all businesses and in all regions in
improving agricultural markets, consolidating its leadership
position. Crop Protection growth was notably high in Latin
America, and across Europe excellent local marketing drove
sales expansion. New products again grew strongly. The
acquisitions of Garst and Golden Harvest, completed in the
second half significantly strengthened our position in US
corn and soybean seeds. Professional Products and Vegetables
and Flowers seeds maintained their five year record of
consistent growth. The immense commitment of our people
worldwide and our sustained focus on cost and capital
efficiency contributed to strong earnings growth and
substantially enhanced returns."
Highlights for 2004
Sales at constant exchange
rates (CER) increased by seven percent. Underlying demand in
the fourth quarter remained strong; reported sales reflect
the realignment of sales closer to consumption for the
coming season, particularly in the USA, Western Europe and
Japan. Full year Crop Protection sales were seven percent
higher; Seeds sales rose by six percent.
EBITDA improved by 18
percent (CER) to $1.4 billion benefiting from the growth in
sales and continued cost efficiency.
Earnings per share,
excluding restructuring and impairment and a one-off tax
benefit, were up 76 percent to $5.87. After charges for
restructuring and impairment earnings per share were $4.34
(2003: $2.45). In addition to the improvement in operating
income, the increase reflects lower net financial expense as
well as a lower underlying tax rate.
Currency: Sales were
positively impacted by four percent due to the weakness of
the US dollar, notably against the Euro, although this
impact narrowed in the second half. At the EBITDA level the
positive effect of US dollar weakness and a benefit from
hedging was offset by the strength of the Swiss franc and
sterling.
Crop Protection: Sales
increased across all product lines and in all regions, with
Europe and Latin America generating the strongest growth.
Increased disease pressure, notably from soybean rust in
Latin America and septoria resistance in European cereals,
contributed to a double-digit increase in fungicide sales,
with AMISTAR(R) exceeding $500 million. Insecticides
benefited from the roll-out of new combination products
while solid growth in herbicides demonstrated the strength
of this product line. Professional Products continued a
record of top line growth driven largely by the expansion of
seed treatment. Total sales of new products grew by 32
percent (CER) to reach $688 million with continuing growth
in the CALLISTO(R) range ($289 million) and in
ACTARA(R)/CRUISER(R) ($298 million) as well as the
successful launch of ENVOKE(R) on cotton in the USA. The
range rationalization program reduced sales by $49 million
(CER) in 2004. This four year program, with a cumulative
sales impact of $301 million, is now complete. EBITDA rose
by 22 percent (CER) to $1463 million.
Seeds: Sales increased
across all businesses and in all regions. Sales of
Vegetables and Flowers increased by 10 percent. Demand in
Field Crops, notably US corn and soybean, was strong;
reported sales increased by two percent, impacted by the
realignment of sales in the fourth quarter for the coming
season's consumption. US field crops seeds have a marked
seasonal pattern of sales and profit, heavily weighted to
the first half. Following their acquisition in the second
half of 2004, Garst and Golden Harvest made a negligible
contribution to sales, as expected, and their consolidation
resulted in the reduction of Seeds EBITDA by 48 percent
(CER) to $68 million. These acquisitions are expected to be
accretive from 2005.
The integration of Garst
and Golden Harvest into the North American field crops
business is well underway. These acquisitions have
significantly increased Syngenta's market share and, from
2005, the US field crops business will benefit from broader
geographic reach, enhanced germplasm and a range of biotech
input traits.
Plant Science: Following
the acquisition of Garst and Golden Harvest, the management
of corn and soybean trait development activities with the
associated cost has been transferred to Seeds. In August
Syngenta signed a long-term technology agreement with Delta
and PineLand (D&PL), the US leader in cotton seed, under
which D&PL will commercialize Syngenta's insect control
technology for cotton.
Restructuring, impairment
and Discontinued Operations: Total restructuring and
impairment charges during the period were $354 million
(cash: $171 million; non-cash: $183 million) of which the
majority related to the program to streamline global
operations, announced in February 2004. The total cost of
the program is expected to be around $850 million over five
years including a non-cash charge of $350 million. Peak
savings of $300 million are expected by the end of 2008. The
sale of SF Chem resulted in an additional charge of $108m.
Cash flow and balance
sheet: Free cash flow, post acquisitions, of $623 million
reflected the increase in operating income, a reduction in
working capital in the second half and lower net financial
expense. The ratio of average trade working capital as a
percentage of sales was 40 percent (2003: 42 percent). Fixed
capital expenditure of $166 million was below depreciation
of $250 million.
At period end net debt was
$864 million (2003: $1.2 billion) representing a gearing
ratio of 15 percent (2003: 24 percent).
Taxation: The underlying
tax rate for the year was 25 percent (2003: 37 percent).
This significant reduction was due to the
earlier-than-expected completion of the tax structure
optimization. The ongoing tax rate is expected to remain in
the mid to low twenties for the foreseeable future.
Cash return to
shareholders: In February 2004 the company announced its
intention to return over $800 million to shareholders
between 2004 and 2006. A total dividend of $142 million was
paid in July. In May the company commenced a share
repurchase program; by end December 1.7 million shares had
been repurchased at an average price of CHF 107.2 which
equates to $143 million. These shares will be cancelled,
subject to approval at the Annual General Meeting (AGM) on
26 April.
In view of the ongoing
strength of financial performance, the 2004 to 2006 cash
return program has been enhanced to more than $1 billion. As
part of this program a dividend of CHF 2.70, to be paid by
way of a nominal par value reduction, will be submitted for
shareholder approval at the AGM on 26 April.
Outlook
Michael Pragnell, Chief
Executive Officer, said:
"2004 marked a new phase in
the evolution of Syngenta. Against a background of favorable
market conditions, we made significant progress in
delivering our strategy. We remain committed to reinforcing
market leadership in Crop Protection and Field Crops seeds;
driving growth in the consumer-led businesses of
Professional Products and Vegetables and Flowers seeds; and
capturing opportunity in new businesses. Our confidence in
our people, our ability to innovate and to exploit our broad
portfolio and commercial reach, leads us to re-affirm our
target of high-teens growth in earnings per share* in each
of the next two years. It also enables us to enhance our
three year cash return program to shareholders to more than
$1 billion by end 2006."
* Fully diluted, before restructuring, impairment, IFRS 3 adjustment and
one-off tax credit.
Crop Protection
For a definition of constant exchange rates and of range rationalization,
see Appendix A and Appendix B respectively.
Full Year Growth
Product line 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Selective herbicides 1867 1717 +9 +4 +6
Non-selective
herbicides 645 616 +5 +2 +2
Fungicides 1702 1438 +18 +12 +13
Insecticides 1049 960 +10 +7 +7
Professional products 708 642 +9 +5 +7
Others 59 48 +21 +16 +16
Total 6030 5421 +11 +7 +8
4th Quarter Growth
Product line 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Selective herbicides 296 285 +4 +1 +4
Non-selective
herbicides 104 107 -3 -4 -4
Fungicides 364 316 +15 +11 +12
Insecticides 243 242 +1 -- --
Professional products 148 143 +2 -- --
Others 26 6 +271 +266 +266
Total 1181 1099 +7 +5 +6
Selective Herbicides: major
brands CALLISTO(R) family, DUAL(R)/BICEP(R) MAGNUM,
ENVOKE(R), FUSILADE(R)MAX, TOPIK(R)
Sales of selective
herbicides were driven by the CALLISTO(R) range, which
further extended market penetration in the US corn-belt
augmented by the launch of LEXAR(R) in central and southern
states. CALLISTO(R) also expanded rapidly in Europe. A
decline in sales of DUAL(R)/ BICEP(R) MAGNUM in the USA was
partly offset by growth in other regions. ENVOKE(R) made a
significant contribution following its launch on cotton in
the USA and generated further growth in Brazil. TOPIK(R) was
particularly successful in southern Europe and in the
expanding markets of Eastern Europe, where sales were up by
more than 50 percent.
Non-selective Herbicides:
major brands GRAMOXONE(R), TOUCHDOWN(R)
GRAMOXONE(R) sales
increased strongly in China following planned channel
inventory reduction in 2003 but were lower in Australia
owing to drought. A strong recovery in TOUCHDOWN(R) sales in
the second half, with volume increases in NAFTA and Latin
America, was partially offset by ongoing price pressure in
the USA.
Fungicides: major brands
ACANTO(R), AMISTAR(R), BRAVO(R), RIDOMIL GOLD(R), SCORE(R),
TILT(R), UNIX(R)
Fungicides registered
strong growth across all regions. AMISTAR(R) sales were
driven primarily by soybean rust in Brazil and increased
demand on several crops in the USA. Growth in Europe
reflected recovery from drought in 2003 and the launch of
combination programs to combat cereal septoria resistance,
notably with BRAVO(R).
Insecticides: major brands
ACTARA(R), FORCE(R), KARATE(R), PROCLAIM(R), VERTIMEC(R)
ACTARA(R) continued to
increase penetration in many markets. KARATE(R) sales
benefited from the strength of Latin American markets and
from high pest pressure in Europe. US sales of FORCE(R)
declined due to a reduction in demand for soil-based corn
rootworm insecticides in favor of seed treatment; this was
partly offset by increased sales in Eastern Europe.
Professional Products:
major brands CRUISER(R), DIVIDEND(R), HERITAGE(R), ICON(R),
MAXIM(R)
Seed treatments continued
to gain popularity among growers in all regions. The main
driver of growth was the further success of CRUISER(R) in
the USA, and on soybean in Brazil. Fungicide seed treatments
also grew strongly, notably MAXIM(R) in Brazil and France.
Turf sales improved with better weather conditions in the
USA and an expansion of direct sales to golf courses in
Japan.
Full Year Growth
Regional 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Europe, Africa
& Middle East 2251 1978 +14 +5 +6
NAFTA 1869 1848 +1 -- +1
Latin America 1017 748 +36 +36 +37
Asia Pacific 893 847 +6 +1 +2
Total 6030 5421 +11 +7 +8
4th Quarter Growth
Regional 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Europe, Africa
& Middle East 366 358 +2 -5 -4
NAFTA 194 218 -11 -11 -11
Latin America 396 278 +42 +42 +42
Asia Pacific 225 245 -8 -10 -7
Total 1181 1099 +7 +5 +6
Sales in Europe, Africa and
the Middle East demonstrated growth across all product
lines, following drought in 2003, with notable contributions
from the entire fungicide range and selective herbicides,
particularly CALLISTO(R). Double-digit increases were
registered in France and Eastern Europe, the latter
benefiting from increased investment in agriculture and
economic growth.
In NAFTA sales of selective
herbicides were stable in a challenging market whilst
non-selectives continued to be affected by price pressure in
glyphosate in the USA, which offset volume growth. Fungicide
sales growth was driven primarily by the success of
AMISTAR(R). Insecticide sales were lower, due to a reduction
in the sales of FORCE(R) and, to a lesser extent, KARATE(R).
Professional Products -- notably seed treatment and turf --
performed well. Strong growth continued in Mexico and in
Canada, with the roll-out of CRUISER(R) on canola.
Latin America: Sales
expanded across the portfolio in Brazil and Argentina as the
international competitiveness of growers and strong export
demand encouraged an increase in acreage under cultivation.
The strongest growth was generated by insecticides, notably
ACTARA(R), and by fungicides, with a significant increase in
AMISTAR(R) sales to control the spread of soybean rust. The
launch of the combination product PRIORI XTRA(R), with both
preventative and curative action, further strengthened
Syngenta's position in this important new market.
In Asia Pacific underlying
demand in Japan was strong. Sales grew strongly in China
where channel inventories have now returned to normal
levels. India showed good growth and sales in Australia
improved in the second half.
Seeds
For a definition of constant exchange rates, see Appendix A.
Full Year Growth
Product line 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Field Crops 648 598 +8 +2 +2
Vegetables
& Flowers 591 506 +17 +10 +10
Total 1239 1104 +12 +6 +6
4th Quarter Growth
Product line 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Field Crops 51 91 -44 -46 -46
Vegetables
& Flowers 101 97 +4 -- --
Total 152 188 -19 -22 -22
Field Crops: major brands
NK(R) corn, NK(R) oilseeds, HILLESHOG(R) sugar beet
Sales of NK(R) corn grew
across all regions. Demand for NK(R) soybean was strong
throughout the year, although reported sales were lower due
to the alignment of fourth quarter sales closer to
consumption in the USA for the coming season. In oilseeds
NK(R) sunflower performed well; sugar beet sales increased
in buoyant Eastern European markets.
Vegetables and Flowers:
major brands S&G(R) vegetables, ROGERS(R) vegetables, S&G(R)
flowers
Sales of vegetables grew in
all regions. In the USA, sales of DULCINEA(TM) products
exceeded $30 million with the continued growth of
PUREHEART(TM) seedless watermelons and the successful launch
of a cantaloupe melon. In Europe, a strong performance in
S&G(R) fresh tomatoes, melons and squash more than offset
market pressure in the processing segment.
Sales of S&G(R) flowers
also increased across all regions reflecting strong genetics
for young plants, effective supply chain management and
implementation of a direct sales model.
Full Year Growth
Regional 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Europe, Africa
& Middle East 641 565 +13 +3 +3
NAFTA 437 400 +9 +8 +8
Latin America 86 79 +8 +8 +8
Asia Pacific 75 60 +26 +19 +19
Total 1239 1104 +12 +6 +6
4th Quarter Growth
Regional 2004 $m 2003 $m Actual % CER % Ex RR (CER) %
Europe, Africa
& Middle East 55 58 -5 -13 -13
NAFTA 56 89 -37 -38 -38
Latin America 23 24 -6 -6 -6
Asia Pacific 18 17 +7 +3 +3
Total 152 188 -19 -22 -22
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 2004 were approximately
$7.3 billion. Syngenta employs some 19,000 people in over 90
countries. Syngenta is listed on the Swiss stock exchange
(SYNN) and in New York (NYSE: SYT).
