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Syngenta AG - 2014 half year results
Halbjahresabschluss 2014
Résultats du premier semestre 2014
Risultati finanziari del primo semestre 2014
Basel, Switzerland
July 23, 2014
- Full English version
- Halbjahresabschluss 2014
- Résultats du premier semestre 2014
- Sales $8.5 billion, up 1 percent: up 4 percent at constant exchange rates
- Late start to North American season reduced crop protection use
- Strong growth in all other regions
- price increases across the business
- EBITDA $2.1 billion, 3 percent lower owing to currency movements
- up 6 percent at constant exchange rates
- Earnings per share[1] $15.60, 2 percent lower
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Reported Financial Highlights
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1st Half 2014
$m
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1st Half 2013
$m
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Actual
%
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CER[2]
%
|
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Sales
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8,508
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8,390
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+1
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+4
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Operating income
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1,725
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1,792
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- 4
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Net income[3]
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1,391
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1,409
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- 1
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EBITDA
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2,111
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2,179
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- 3
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+6
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Earnings per share1
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$15.60
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$15.92
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- 2
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______________________
[1] Excluding restructuring and impairment; EPS on a fully-diluted basis.
2 Growth at constant exchange rates.
3 Net income to shareholders of Syngenta AG (equivalent 1st Half 2014 diluted earnings per share of $15.11).
[1] Excluding restructuring and impairment; EPS on a fully-diluted basis.
[2] Growth at constant exchange rates.
[3] Net income to shareholders of Syngenta AG (equivalent 1st Half 2014 diluted earnings per share of $15.11).
Mike Mack, Chief Executive Officer, said:
“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. Growth in all other regions was robust, exceeding our full year target rate of six percent at constant exchange rates. Emerging market sales increased by 11 percent, with performance clearly demonstrating the success of our integrated strategy. Pricing remained firm across the business.
“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. In February we announced a comprehensive new program to accelerate operational leverage from 2015. Project teams are working on the implementation of this program across the company, and we are on track to deliver significant savings in production, commercial operations and R&D. Our priority is to ensure that ongoing sales growth is accompanied by improved profitability and strong cash flow generation.”
Financial highlights 1st Half 2014
Sales $8.5 billion
Sales increased by 4 percent at constant exchange rates. The increase reflected higher prices with volumes unchanged owing to the adverse weather in North America; all other regions showed volume increases. The underlying rate of price increase, excluding currency-related adjustments and glyphosate, was just over 2 percent.
EBITDA $2.1 billion
EBITDA was 3 percent lower in reported terms but increased by 6 percent at constant exchange rates. The EBITDA margin (CER) was 26.6 percent (H1 2013: 26.0 percent).
Net financial expense and taxation
Net financial expense at $100 million was slightly higher (H1 2013: $90 million) due to increased hedging costs associated with emerging market growth. The tax rate was 15 percent (H1 2013: 18 percent).
Net income $1.4 billion
Net income including restructuring and impairment was 1 percent lower. Earnings per share, excluding restructuring and impairment, were 2 percent lower at $15.60.
Cash flow
Free cash flow before acquisitions was $(113) million compared with $(319) million in H1 2013. Since the start of the year cash flow from inventory reduction has had a favorable impact of $428 million compared with last year. Average trade working capital as a percentage of sales was 42 percent (H1 2013: 37 percent) reflecting the increase in inventories in the second half of 2013. Inventories as a percentage of sales are expected to decrease by two percentage points as the 2014 Latin American season progresses.
Fixed capital expenditure including intangibles was $312 million (H1 2013: $274 million); for the full year capital expenditure of around $750 million is expected.
Dividend and share repurchase
A dividend of CHF 10.00 per share (2013: CHF 9.50) was paid on May 7, representing a total payout of $1,032 million. In the first half of the year the company repurchased 136,000 shares for a total amount of $48 million, at an average share price of CHF 322.60.
Balance sheet
In March Syngenta completed two bond issues as part of its normal funding requirements and in order to further enhance its debt maturity profile. A EUR 750 million issue comprised a EUR 250 million Eurobond maturing in 2017 and a EUR 500 million Eurobond maturing in 2021. A CHF 750 million Swiss domestic bond issue comprised a CHF 350 million bond maturing in 2019, a CHF 250 million bond maturing in 2024 and a CHF 150 million bond maturing in 2029.
Business highlights 1st Half 2014
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Half Year
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Growth
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2nd Quarter
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Growth
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2014
$m
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2013
$m
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Actual
%
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CER
%
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2014
$m
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2013
$m
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Actual
%
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CER
%
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Europe, Africa, Middle East
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3,336
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3,165
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+5
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+7
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1,241
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1,229
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+1
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+2
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North America
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2,443
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2,628
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-7
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-6
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1,211
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1,287
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-6
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-5
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Latin America
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1,269
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1,174
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+8
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+11
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674
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606
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+11
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+14
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Asia Pacific
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1,096
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1,057
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+4
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+10
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538
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532
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+1
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+7
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Total integrated sales
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8,144
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8,024
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+1
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+4
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3,664
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3,654
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-
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+2
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Lawn and Garden
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364
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366
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-1
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-
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162
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166
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-3
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-2
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Group sales
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8,508
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8,390
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+1
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+4
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3,826
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3,820
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-
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+2
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Integrated sales performance
- Sales $8.1 billion, up 4%1
- EBITDA $2.0 billion (H1 2013: $2.1 billion)
- EBITDA margin[4] 26.8% (H1 2013: 26.2%)
Europe, Africa and the Middle East: An early start to the season led to increased weed, disease and insect pressure contributing to a strong first half performance. The slower pace of growth in the second quarter was primarily due to the impact of lower spring plantings on seeds sales; crop protection demand remained robust. In the first half all territories registered growth in integrated sales, with the strongest growth rates coming from the CIS and Iberia. In the CIS, volume growth was achieved despite the political uncertainty and was augmented by significant price increases in Ukraine to offset currency depreciation.
1 At constant exchange rates
North America: Prolonged cold temperatures delayed the start of the US season until late May, reducing the level of disease and insect pressure as well as the need for pre-emergent herbicide sprays. In Canada, demand in the second quarter was affected by a reduction in cereals acreage and by flooding. In addition, sales of low margin TOUCHDOWN® were deliberately constrained, with the aim of focusing on higher value mixture products to combat resistance. Sales of corn and soybean seeds reflected the acreage shift in the USA and overall were slightly higher.
Latin America: In Latin America, the pace of growth continued to improve despite dry conditions in Brazil and Argentina which reduced selective herbicide sales in the second quarter. TOUCHDOWN® sales were also lower in line with the re-focusing of this business. Infestation by the helicoverpa caterpillar contributed to a significant increase in insecticide sales in Brazil, where fungicide sales also increased sharply. In Venezuela, sales resumed following a payment delay at the end of 2013. Sales of both corn and soybean seeds increased.
Asia Pacific: Growth was strong in both developed and emerging markets. In Australasia, rainfall increased grower confidence resulting in growth across the crop protection portfolio. South Asia saw strong growth in protocols for Vegetables and a significant increase in corn seed sales. In China, sales of AMISTAR® technology continued to expand on rice and vegetables.
Lawn and Garden performance
- Sales $364 million, unchanged1
- EBITDA $70 million (H1 2013: $77 million)
- EBITDA margin[5] 20.9% (H1 2013: 21.2%)
The late spring in North America also affected consumer demand for flowers, while in Europe demand reflected the subdued economic environment in a number of countries. Emerging markets however continued to expand rapidly, with double digit sales growth in Latin America and Asia Pacific. The EBITDA margin at constant exchange rates remained above the 20 percent target level set for 2015.
Acquisitions
In April Syngenta acquired Società Produttori Sementi (PSB), a leading Italian durum wheat seed company. The acquisition will accelerate innovation in the breeding and production of durum wheat for pasta.
In June Syngenta announced an agreement to acquire Lantmännen’s winter wheat and oilseed rape businesses in Germany and Poland. Through the acquisition Syngenta will gain access to high quality germplasm, a seeds pipeline and commercial varieties which complement the existing portfolio.
New partnerships
In April Syngenta announced an agreement with Cellulosic Ethanol Technologies, LLC to license its ACE (Adding Cellulosic Ethanol) technology, a new process for ethanol plants. ACE technology is being combined with Syngenta’s proprietary corn trait ENOGEN®; production of cellulosic ethanol has already commenced at the Quad County Corn Processors plant in Galva, Iowa.
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1 At constant exchange rates
In June Syngenta and Anheuser-Busch InBev (AB InBev) announced a partnership to secure the sourcing of high quality malting barley for the beer industry. The partnership will give growers access to agronomic support alongside the best malting barley varieties, enabling them to achieve consistent yield and quality increases.
Outlook
Mike Mack, Chief Executive Officer said:
“In the second half of the year we expect an acceleration of sales growth driven by Latin America, where we see strong momentum for the launch of ELATUS™. On this basis we continue to expect full year integrated sales growth of around 6 percent at constant exchange rates. Profitability in the second half of the year will benefit from the non-recurrence of the seeds inventory write-down incurred in the second half of 2013. For the full year, earnings growth, together with a reduction in trade working capital as a percentage of sales, will underpin targeted free cash flow before acquisitions of around $1.3 billion.”
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Risultati finanziari del primo semestre 2014
- Vendite in crescita dell’1% a 8,5 miliardi di dollari: aumento del 4% a tasso di cambio costante
- Il ritardo dell’inizio della stagione in Nord America ha ridotto l’utilizzo dei prodotti per la difesa delle colture
- Crescita sostenuta in tutte le altre regioni
- Aumento dei prezzi in tutte le attività
- EBITDA pari a 2,1 miliardi di dollari: in calo del 3%, a causa di movimenti nella valuta
- In aumento del 6% a tasso di cambio costante
- Utile per azione pari a 15,60 dollari: in calo del 2%
Mike Mack, Chief Executive Officer, ha dichiarato:
“Nel primo semestre il ritmo di crescita è stato influenzato delle cattive condizioni meteorologiche in Nord America. Queste ultime, unite a una riduzione delle superfici coltivate, hanno influenzato in maniera significativa il mercato della difesa delle colture. Tutte le altre regioni hanno registrato una solida crescita sorpassando il nostro target del 6% a tasso di cambio costante per l'intero anno. Il fatturato dei mercati emergenti è aumentato dell'11% dimostrando chiaramente con questa performance il successo della nostra strategia integrata. I prezzi sono rimasti costanti per tutte le attività”.
“La redditività è stata influenzata dal calo dei volumi delle vendite in Nord America e dalla debolezza delle valute dei mercati emergenti. A tasso di cambio costante, il margine EBITDA è aumentato, sostenuto dall'aumento dei prezzi, costi più bassi delle sementi e risparmi grazie al nostro programma di efficienza operativa in corso. A febbraio, abbiamo annunciato un nuovo programma completo che mira a migliorare la leva operativa a partire dal 2015. Team di progetto stanno lavorando all’implementazione di questo programma in tutta l’azienda e siamo a buon punto per ottenere risparmi significativi a livello di produzione, attività commerciali e ricerche e sviluppo. È nostra priorità assicurare che l’aumento delle vendite sia accompagnato da una crescita della redditività e generi un solido flusso di cassa”.
Outlook
Mike Mack, Chief Executive Officer, ha dichiarato:
“Nel secondo semestre dell'anno ci aspettiamo un'accelerazione della crescita delle vendite trainata dall'America Latina, dove osserviamo una dinamica favorevole per il lancio di ELATUS™. Su questa base, continuiamo a puntare sulla crescita delle vendite integrate di circa il 6% a tasso di cambio costante per tutto l'anno. Nel secondo semestre, la redditività beneficerà dell'assenza di una nuova riduzione del valore dello stock di sementi subita nel secondo semestre 2013. Per tutto l'anno, la crescita del beneficio, combinata a una riduzione del capitale circolante commerciale come percentuale delle vendite, dovrebbe sostenere l’obiettivo di flusso di cassa disponibile prima delle acquisizioni di circa 1,3 miliardi di dollari.”
More news from: Syngenta Group Co. Ltd.
Website: http://www.syngenta.com Published: July 23, 2014 |
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