A little more good news for Crop Protection Companies. I find it interesting that sales decline and profits rise. That points to successful restructuring. (American auto makers should talk to these guys). Also worth noting is the importance of Brazil.
Syngenta 1st Half Profit Up 5.4%; Maintains OutlookBy Stefanie Weitz
Of DOW JONES NEWSWIRES
ZURICH -(Dow Jones)- Syngenta AG (SYT), the Swiss agrochemical company,
Wednesday said first-half net profit rose 5.4% despite a decline in sales, as
savings from a restructuring program offset higher costs for oil-related raw
material products.
Despite slower growth compared to the first six months last year, Syngenta
reiterated its long term outlook - contrary to some analyst expectations. It
targets double digit growth in earnings per share through 2008 - before
restructuring and impairment charges.
Syngenta, one of the largest makers of crop protection products and seeds
around the globe, said net profit attributable to shareholders increased in the
first six months to $961 million from $912 million in the same period a year
earlier, as difficult market conditions in Brazil and the U.S. hampered faster
growth.
Net income progression, which beat analysts' expectations, was also helped by
a lower tax bill in 2006.
Sales in the first half declined to $5.2 billion from $5.39 billion, hit by
lower sales at its seed business and an 11% decline in fungicide sales on lower
occurrence of soybean rust in the U.S.
The results are very strong despite sluggish market conditions in Europe and
North America, said Cheuvreux analyst Patrick Lambert, who rates the shares at
buy.
Syngenta's operations in Brazil - one of the key markets for crop protection
products worldwide - were not as badly hit by the continuous strength of the
Brazilian real to the U.S. dollar than analysts expected. Despite the difficult
market conditions, the company was able to increase sales in the region by 6% to
$327 million from $307 million last year.
In an interview with Dow Jones Newswires, Chief Executive Michael Pragnell
said Syngenta has further gained market share in that region.
So Syngenta paints a different picture for that market, contrary to recent
comments from competitors Bayer AG's (BAY) and BASF AG's (BF) crop science
businesses, Cheuvreux' Lambert added.
Syngenta's Pragnell said "
Continued costs discipline enabled us to offset the
impact of higher oil related costs."
Gross profit excluding restructuring and impairment costs declined 2.3% to
$2.81 billion from $2.87 billion a year ago, as the company generated savings of
$106 million in the first six month.
Pragnell added that he expects the company to generate another $100 million in
savings in the second half.
That target was welcomed by Bank Sarasin analyst Bernd Pomrehn, who expects
the impact from higher raw material costs to be lower in the second half, boding
well for margins.
Pomrehn, who expects the shares to open higher Wednesday, rates Syngenta at
buy with CHF205 price target.
Syngenta shares closed at CHF163 Tuesday, gaining only 1.8% year-to-date and
underperforming the broader Swiss Market Index.
Company Web Site: http://www.syngenta.com
-By Stefanie Weitz, Dow Jones Newswires; +41-43-443-8048;
stefanie.weitz@dowjones.com
(END) Dow Jones Newswires
07-26-06 0250ET
Copyright (c) 2006 Dow Jones & Company, Inc.- - 02 50 AM EDT 07-26-06
