Syngenta sees profit slide amid currency pressure
Leading agrochemicals group Syngenta on Wednesday posted a 2.0 percent drop in net profit, pointing to restructuring costs and pressure on currencies in emerging markets.
In 2014, the Swiss company raked in a net profit of $1.6 billion (1.4 billion euros), on sales that were up three percent at $15.1 billion.
The result narrowly beat the expectations of analysts polled by the AWP financial news agency, who had anticipated a net profit of $1.5 billion on sales of $15 billion.
The company, which specialises in insecticides to protect crops and competes with US giant Monsanto, said that not counting restructuring costs and impairments, its earnings per share inched up one percent to $19.42.
Syngenta last year launched a massive restructuring programme, which the company said would lead to the termination or relocation of some 1,800 jobs in 2015.
The company, which makes more than half of its sales in emerging markets, meanwhile saw currency fluctuations take a heavy toll, draining $90 million out of its operating margin.
In a bid to withstand the brutal fall of the ruble and the Ukrainian hryvnia, Syngenta raised prices, allowing it to make back around half of its losses in those currencies.
"With emerging markets now accounting for over 50 percent of our sales, managing more volatile conditions has become an integral part of our business," company chief Mike Mack said in the earnings statement.
Not counting currency fluctuations, the company said its sales were five percent higher in 2014 than the year before.
Syngenta saw its sales swell seven percent in Latin America, where its new fungicide Elatus raked in more than $300 million after its launch in Brazil.
In North America though, sales plunged seven percent because of a longer than usual winter season that delayed crops, as well as because of widespread flooding in Canada. Sales were also hit by a reduction of acres for planting corn, the company said.
Syngenta was cautious about the future, saying it expected its sales at constant exchange rates to remain "broadly unchanged", adding that it was planning further price hikes to offset continued currency pressures.
"In 2015, in an environment of crop price and currency volatility, we will continue our track record of rigorous risk management," Mack said.
Syngenta said its board planned to propose hiking the dividend paid on 2014 earnings by 10 percent to 11 Swiss francs per share, reflecting "the company's confidence in future cash generation and its robust balance sheet."
Following the announcement, Syngenta saw its share price swell 3.53 percent in midday trading to 311 Swiss francs, as the Swiss stock exchange's main SMI index grew 1.31 percent.
© 2015 AFP