Farm chemicals maker Syngenta sees record sales
Caroline Copley, Reuters, 02/06/2013
ZURICH - Swiss group Syngenta forecast another year of record sales as high crop prices and erratic weather spur farmers to use more of its pesticides, fertilisers and advanced seeds to boost yields.
The world's biggest farm chemicals maker said on Wednesday it would raise its dividend by 19 percent after full-year net profit beat expectations. But its shares fell, with several analysts saying profits were flattered by a lower tax rate.
By 0924 GMT, the shares were down 1.6 percent, compared to a 0.1 percent fall in the Stoxx 600 European chemicals index.
Net profit rose 17 percent to $1.87 billion to beat the average analyst forecast in a Reuters poll.
"At today's levels, the shares clearly offer a less favourable risk-reward profile short term," said Bank Vontobel analyst Patrick Rafaisz. He rates the shares a "hold".
Sales at Syngenta, which competes with DuPont, and Germany's Bayer, rose 7 percent in 2012 to $14.2 billion, falling just short of the average analyst forecast of $14.3 billion.
"2013 I think is set to be strong. All you have to do is to look at the fourth quarter exit rates for some of our big markets... We start the year with confidence," Chief Executive Mike told Reuters in an interview.
A buoyant end to the Latin America planting season and strong demand for early seed and herbicide sales in the U.S. prompted its U.S. rival Monsanto to raise its earnings forecast.
Syngenta, which sells products to kill weeds and bugs as well as genetically-modified seeds, is targeting sales of its top eight crops of $25 billion by 2020.
To achieve that goal, it is banking on innovation and a more integrated business that supplies farmers with everything from seeds and pesticides to fertilisers and support services.
Last September, the company snapped up Belgian seed firm Devgen, giving it access to RNAi technology - a naturally occurring mechanism for the regulation of specific genes which scientists want to harness to reduce crop damage.
Despite the higher dividend pay-out, Mack said the company remained "open for business" on acquisitions, particularly in technology and crops, which were more likely to be bolt-on purchases.
The Basel-based firm announced a dividend of 9.50 Swiss francs per share, up from 8 francs a year ago.
A sharp fall in bee populations around the world in recent years has prompted criticism of pesticide use and last week the European Commission said it wanted EU member states to suspend the use of neonicotinoid insecticides.
Mack said the decision was "scientifically misguided", but said it would have no material impact on 2013 sales as any restriction would only come into place after the sunflower, oil seed rape and corn is largely sown.
Its pesticide, named Cruiser OCR, makes up less than 0.5 percent of group sales, and Mack said Syngenta would try to offset any loss in revenue through other products.