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Syngenta - 2014 full year results - Sales growth target achieved: ELATUS launch exceeds expectations
Jahresabschluss 2014 - Umsatzwachstumsziel erreicht: Markteinführung von ELATUS übertrifft Erwartungen
Résultats de l’exercice 2014 - Objectif de croissance des ventes atteint: le lancement d’ELATUS dépasse les attentes
Risultati Finanziari Annuali 2014: Obiettivi di crescita delle vendite raggiunti: supera le aspettative il lancio di ELATUS


Basel, Switzerland
February 4, 2015

Jahresabschluss 2014 - Umsatzwachstumsziel erreicht: Markteinführung von ELATUS übertrifft Erwartungen

Résultats de l’exercice 2014 - Objectif de croissance des ventes atteint: le lancement d’ELATUS dépasse les attentes

Risultati Finanziari Annuali 2014: Obiettivi di crescita delle vendite raggiunti: supera le aspettative il lancio di ELATUS

Syngenta (SYT:XNYS) full-year 2014 results interview with CEO Mike Mack

2014 Full Year Results

Sales growth target achieved: ELATUS™ launch exceeds expectations

  • Integrated sales up 6 percent at constant exchange rates
    • up 7 percent excluding glyphosate
    • fourth quarter sales up 12 percent
  • Total sales up 5 percent at constant exchange rates to $15.1 billion
  • ELATUS™ sales in Brazil over $300 million
  • EBITDA $2.9 billion, up 1 percent; margin 19.3 percent
    • up 7 percent at constant exchange rates
    • Operational leverage measures: $265 million savings in 2015
  • Earnings per share[1] $19.42, up 1 percent
  • Free cash flow before acquisitions $1.2 billion
  • Proposed dividend increased by 10 percent to CHF 11.00

 

Reported Financial Highlights

 

2014
$m

2013
$m

Actual
%

CER2
%

Sales

15,134

14,688

+3

+5

Operating income

2,105

2,086

+1

 

Net income

1,619

1,644

-2

 

 

EBITDA

2,926

2,895

+1

+7

Earnings per share1

$19.42

$19.30

+1

 

 

_______________________

[1] Excluding restructuring and impairment; fully-diluted

2 At constant exchange rates

 

Mike Mack, Chief Executive Officer, said:

“In 2014 we achieved our integrated sales target of six percent at constant exchange rates despite lower crop prices, unfavorable weather conditions in North America and a deliberate reduction in low margin sales of glyphosate. Emerging markets registered double digit growth[2] for the fifth consecutive year despite the geopolitical uncertainty in the CIS. Encouragingly, growth in Western Europe was also robust, with a particularly strong performance from our broadened fungicide portfolio. In Latin America, our new fungicide ELATUS™ achieved sales of over $300 million following its introduction in Brazil. This is the largest product launch in Syngenta’s history, resulting in widespread grower recognition of the product’s superlative performance against soybean rust.

“With emerging markets now accounting for over 50 percent of our sales, managing more volatile conditions has become an integral part of our business. A negative impact from currencies, notably those of the CIS, resulted in an EBITDA margin slightly below the previous year. Margins in 2014 were also affected by adverse product mix linked in large part to the reduction in US corn acres. We remain focused on improving profitability and in November announced decisive actions underpinning the realization in 2015 of the first cost savings under our Accelerating Operational Leverage program. The program will enhance our commercial effectiveness as well as improving efficiency in Research and Development and in the supply chain. It will allow us to realize the full potential of the integrated strategy and will ensure that increases in profitability are sustained over time.” 

Financial highlights 2014

Sales $15.1 billion

Sales rose by five percent at constant exchange rates, with volume up two percent and prices three percent higher. Integrated sales were six percent higher with volume and price both up three percent. Excluding glyphosate integrated sales rose seven percent. Acquisitions contributed $48 million to sales; the divestment of Dulcinea Farms in December 2013 reduced sales by $71 million.

EBITDA $2.9 billion

EBITDA was up one percent, with an EBITDA margin of 19.3 percent (2013: 19.7 percent). Profitability was affected by sales mix and an adverse currency impact of $90 million net of CIS price increases. At constant exchange rates the EBITDA margin was slightly higher at 20.0 percent.

Net financial expense and taxation

Net financial expense of $217 million (2013: $200 million) included increased hedging costs associated with emerging market growth.

The tax rate before restructuring and impairment was unchanged at 15 percent.

Net income $1.6 billion

Net income including restructuring and impairment was two percent lower. Earnings per share excluding restructuring and impairment were one percent higher at $19.42 (2013: $19.30).

______________________

[1] At constant exchange rates

Cash flow and balance sheet

Free cash flow before acquisitions reached $1.2 billion compared with $525 million in 2013. Trade working capital as a percentage of sales was 34 percent compared with 35 percent in 2013 reflecting a significant reduction in inventory. Fixed capital expenditure including intangibles was $717 million (2013: $727 million). Acquisition spending at $89 million was below the $140 million recorded in 2013. Cash flow return on investment was 11 percent and was below the target of over 12 percent due to the impact of currencies on EBITDA. The ratio of net debt to equity was 27 percent (2013: 24 percent).

Dividend and share repurchase

The total cash return to shareholders in 2014 was $1,081 million. The dividend was raised by five percent, or 12 percent in US dollars, to give a total dividend payout of $1,032 million. Share repurchases amounted to $49 million.

The Board of Directors will propose to the AGM on April 28, 2015 to increase the dividend to CHF 11.00 per share from CHF 10.00 in 2013. This represents an increase of 10 percent in Swiss francs and 6 percent in US dollars at end January exchange rates, with a payout ratio of 60 percent. The decision to increase the dividend reflects the company’s confidence in future cash generation and its robust balance sheet. The company retains the flexibility to execute tactical share buybacks.

Business highlights 2014

 

Full Year

Growth

 

4th Quarter

Growth

 

2014
$m

2013
$m

Actual
%

CER
%

 

2014
$m

2013
$m

Actual
%

CER
%

Europe, Africa, Middle East

4,547

4,223

+8

+11

 

580

442

+31

+48

North America

3,582

3,848

-7

-6

 

634

717

-12

-11

Latin America

4,279

3,991

+7

+9

 

1,739

1,581

+10

+13

Asia Pacific

2,033

1,935

+5

+10

 

515

472

+9

+13

Total integrated sales

14,441

13,997

+3

+6

 

3,468

3,212

+8

+12

Lawn and Garden

693

691

-

+1

 

183

170

+8

+11

Group sales

15,134

14,688

+3

+5

 

3,651

3,382

+8

+12

Integrated sales performance

  • Sales $14.4 billion, up 6%
    • volume +3%, price +3%
  • EBITDA $ 2.8 billion (2013: $2.7 billion)
  • EBITDA margin 19.2% (2013: 19.6%)

Europe, Africa and the Middle East: A strong full year performance saw growth in all territories. The fourth quarter was driven by the rapid expansion of the HYVIDO® hybrid barley solution, the consolidation of seeds acquisitions and by strong early demand for crop protection. The CIS registered good volume growth in both crop protection and seeds, with a rebound in the fourth quarter. Significant price increases offset around half of the currency loss following the sharp depreciation of the Russian ruble and the Ukrainian hyrvnia. New SDHI fungicides made a notable contribution to growth in the region, with SEGURIS® and VIBRANCE® both increasing sales by more than 75 percent. 

North America: Sales were affected by prolonged cold temperatures in the first half of the year which delayed the start of the US season and reduced insect pressure. In Canada cereals acreage was lower and demand was further affected by flooding. Non-selective herbicide sales in the region were down as a result of the deliberate reduction in glyphosate. In seeds, soybean sales were up due to higher acreage and to increased bulk shipments under an early order program. Corn sales were down in a context of reduced acres but demand for AGRISURE VIPTERA®, for which Chinese import approval was secured in December, was sustained. 

Latin America: Although irregular rainfall caused some delays in planting and crop protection consumption, sales were up by 9 percent, or by 15 percent excluding glyphosate. In crop protection, the new fungicide ELATUS™ recorded sales of over $300 million following its launch in Brazil, where there was also strong insecticide growth due to severe caterpillar pressure in soybean, corn and cotton. Crop protection for sugar cane was lower owing to drought during the summer and to lower ethanol prices affecting the profitability of sugar cane mills. Corn seed sales increased slightly despite lower acreage and soybean was up sharply. 

Asia Pacific: Performance was robust in both emerging and developed markets, with particularly strong performances in South Asia, China and Australasia. Growth in fungicides reflected increased adoption of AMISTAR® technology in China and new launches in South Asia. Vegetables growth was driven by further adoption of MAXVEG™ protocols as well as sweetcorn seed growth in China and South Asia. Double digit sales growth in GRAMOXONE® reflected tight supply and higher prices, particularly in ASEAN; sales in China were sharply lower in the second half as government restrictions on liquid paraquat formulations took effect.

Lawn and Garden performance

  • Sales $693 million, up 1%
  • EBITDA $148 million (2013: $154 million)
  • EBITDA margin 21.4% (2013: 22.2%)

Double digit growth in the fourth quarter reflected a recovery in the golf market, which earlier in the year was affected by poor weather conditions in North America and Japan. For the full year, the overall business saw significant emerging market expansion in Asia Pacific and Latin America. In the developed markets, challenging business conditions in Flowers continued particularly in Europe, due to a lack of consumer confidence in key markets such as Germany and France. As a result of portfolio streamlining to focus on high value chemistry and genetics, the business is expected to maintain the targeted EBITDA margin of 20 percent in 2015.

Accelerating Operational Leverage

The Accelerating Operational Leverage program, announced in February 2014, targets savings of $1 billion by 2018 and has three main pillars: Commercial; Research and Development; and Global Operations. The program’s aim is to optimize the cost structure within the framework of the integrated strategy in order to attain industry-leading efficiency. In November the company announced important steps to underpin the first savings of $265 million (including $75 million from a previous program) in 2015. These steps will result in job reductions and relocations totaling around 1,800 across the company.

Acquisitions and divestments

In April Syngenta acquired Società Produttori Sementi (PSB), one of Italy's oldest seed companies and a leader in durum wheat breeding and production for pasta – a global market valued at $16 billion. PSB’s unrivalled durum wheat breeding expertise and its links to the food industry are complemented by Syngenta's leading-edge cereals R&D and global presence.

In June Syngenta announced an agreement to acquire the German and Polish winter wheat and winter oilseed rape breeding and business operations of Lantmännen, the Swedish food, energy and agriculture group. Syngenta gained access to high quality germplasm, a seeds pipeline and commercial varieties which complement its portfolio in two of Europe's most important crops.

New partnerships

In April Syngenta announced an agreement with Cellulosic Ethanol Technologies, LLC to license its CELLERATE™ technology, a new process enabling ethanol plants to produce cellulosic energy and improve their profitability. CELLERATE™ technology is being combined with Syngenta’s proprietary corn trait ENOGEN® and commercial production is already underway at the Quad County Corn Processors plant in Galva, Iowa.

Also in April Syngenta signed a Memorandum of Understanding with the United Nations Convention to Combat Desertification (UNCCD) to establish and operationalize the Soil Leadership Academy. The Academy will engage research institutes, universities, and on-the-ground practitioners to share knowledge and expertise in soil conservation and sustainable land management.

In June Syngenta announced a partnership with Anheuser-Busch InBev to secure the sourcing of high quality malting barley, the key raw material for the beer industry. Under the agreement, growers have access to the best Syngenta malting barley varieties and a tailored growing approach. By following the protocol growers will achieve superior yields, enabling them to supply AB InBev with consistently high quality grain to meet the exacting standards for beer production.

Innovation

The strong performance of the broad spectrum fungicide ELATUS™/Solatenol™ in Brazil has resulted in an upward revision of its peak sales potential from over $500 million to $1 billion. The peak sales potential of VIBRANCE®, a fungicide seed treatment launched in 2011, has also been revised up, from over $300 million to $500 million. In 2014 Syngenta also launched Fortenza®/Cyantraniliprole for early season insect control, and CLARIVA™, a biological for the control of soybean cyst nematodes. 

The power of Syngenta’s innovation and the promise of the pipeline will be further demonstrated at an R&D Day to be held at our Research Center in Stein, Switzerland on September 16, 2015.

Outlook

Mike Mack, Chief Executive Officer, said:

“Syngenta’s integrated strategy continues to gain momentum as evidenced by the strong sales growth achieved in 2014. Our focus is now on achieving above market growth and on driving greater profitability through operational leverage.  

“In 2015, in an environment of crop price and currency volatility, we will continue our track record of rigorous risk management. We expect to offset a significant part of emerging market currency devaluations through price increases. Sales are expected to be broadly unchanged at constant exchange rates. EBITDA after the impact of currencies will be around the 2014 level. Our continuing attention to working capital management will again result in substantial free cash flow generation.

“Looking further ahead, in 2016 at current levels we expect lower raw material costs to offset the impact of the recent Swiss franc appreciation on our cost base. Sales and margins will increasingly benefit from new product launches and cost efficiencies, both of which underpin our 2018 margin target of 24 to 26 percent. Higher profitability and capital efficiency will ensure that cash generation remains strong, enabling us to continue increasing the cash return to shareholders.”

 

[1] Excluding restructuring and impairment; fully-diluted

2 At constant exchange rates

[2] At constant exchange rates

 



More news from: Syngenta Group Co. Ltd.


Website: http://www.syngenta.com

Published: February 4, 2015

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