Bloomberg News

Syngenta Predicts ‘Substantial’ Gain in Full-Year Revenue

October 14, 2011

(Updates stock price in fifth paragraph, adds CFO comments from sixth.)

Oct. 14 (Bloomberg) -- Syngenta AG forecast full-year revenue will rise “substantially” as the world’s largest maker of agricultural chemicals sees no drop-off in orders.

Syngenta, based in Basel, Switzerland, raised prices by 3 percent in the third quarter and the company is planning further increases for 2012, Chief Financial Officer John Ramsay said today in an interview. Third-quarter sales rose 21 percent to $2.66 billion, beating a $2.48 billion analyst estimate.

Farmers, especially in Latin America, are benefiting from higher crop prices, helping Syngenta pass on the price increases needed to improve margins and offset raw-material costs, Ramsay said by phone. The company aims to gain market share as it reorganizes its business by integrating its crop-protection and seed units. The growth in sales volumes continued into the current quarter, Ramsay said.

“We’re really pleased that the pricing came through,” Ramsay said. “It puts a seal on the past and signals that pricing has changed for the better.”

The stock gained as much as 4.4 percent to 276.4 Swiss francs in Zurich trading, the biggest jump since July 22 when Syngenta last reported quarterly figures. The shares, up 2.7 percent at 271.8 francs as of 11:20 a.m., are little changed this year for a value of about 25 billion francs ($28 billion).

Profit Outlook

Profit in the third quarter, which the company didn’t release today, is in line with current plans, Ramsay said. Profit “momentum” is similar to that of the first half, he said. Analysts probably shouldn’t raise their estimates for the company because it’s an “uncertain world,” Ramsay said.

“I’m not being unnecessarily pessimistic,” he said. “I just think we have to be realistic and not get carried away.”

Analysts predict annual revenue will rise 13 percent, based on the average of four estimates in a Bloomberg survey. Cash flows are at a record and the company will likely raise its dividend from 2010’s 7 francs a share, company spokesman Michael Isaac said. Bloomberg predicts a 7.40-franc payout.

The Swiss company plans to grow its seed business, which contributes about a fifth of sales, and is seeking smaller acquisitions, Ramsay said today. While seed companies are expensive at the moment, marketing synergies may still mean that a purchase would add value, the CFO said.

The company plans to report figures for its lawn and garden business separately once the integration of crop protection and seeds is complete, Ramsay said. While the business is small, it’s profitability is attractive because of technology and manufacturing synergies, the CFO said. Syngenta sees the unit as core and plans further investment, he said.

--Editors: Andrew Noel, Benedikt Kammel

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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