Syngenta Full-year Profit Declines; On Track To Meet Targets; Ups Dividend

(RTTNews) - Swiss agribusiness firm Syngenta AG (SYT) reported Wednesday a decline in fiscal 2013 profit. Sales, however, were benefited by growth in all regions, except North America. The company also announced higher dividend, and said it is on track to meet its growth objectives.

According to the company, the primary factors affecting profitability were reduced trait royalty income, an increase in seeds production costs of $175 million following the drought in the USA in 2012; and a seeds inventory write-down of $170 million.

Further, the company announced a new program to accelerate operational leverage, aiming for around $1 billion annual savings by 2018. The total cost of the program, which targets EBITDA margin improvement and a significant reduction in working capital, is estimated at around $900 million.

Chief Executive Officer Mike Mack said, ".. our financial performance in 2013 did not meet expectations. While this was mainly due to non-recurring costs in our seeds business, we are determined to intensify our focus on cost and capital efficiency while maintaining our ambitious growth objectives."

For the full year, the company reported a 11 percent drop in net income attributable to shareholders to $1.64 billion, from $1.85 billion a year before.

The latest results included restructuring and impairment charges of $1.52 per share, lower than prior year's $1.98 per share. Adjusted earnings per share, which excluded items, were $19.30, compared to $22.03 last year.

Earnings before interest, tax, depreciation and amortization or EBITDA, a key earnings metric, declined 7 percent year-on-year to $2.9 billion. EBITDA margin of 19.7 percent fell from last year's 21.9 percent.

However, the firm's annual sales grew 3 percent to $14.69 billion from the previous year's $14.20 billion. Sales increased 5 percent at constant exchange rate. Total integrated sales rose 6 percent at constant rates benefited by a 4 percent increase in volume and 2 percent growth in prices.

In the year, sales progression in North America was affected by the reduction in trait royalty income.

Crop protection sales grew 6 percent mainly with a strong growth in non-selective herbicides as well as seed care.

In the fourth quarter, sales increased 4 percent year-over-year to 3.38 billion francs. At constant exchange rate, sales grew 7 percent. Total integrated sales grew 5 percent with growth in all regions.

Further, the company said its Board of Directors will propose a 5 percent increase in the dividend to 10 Swiss francs per share from 9.50 francs in 2012.

Looking ahead, Syngenta anticipates that integrated sales in 2014 will grow at a similar rate to 2013. The gross margin is expected to improve with lower seeds costs.

Mack added, "Looking further ahead, we remain on track to deliver our 2020 sales ambition of $25 billion. In 2015 we expect to be at the lower end of our target margin range. We will accelerate operational leverage through significant efficiency gains, enabling us to raise the EBITDA margin target to 24-26 percent by 2018."

In Stockholm, Syngenta shares closed Tuesday's trading at 317 francs, down 1.30 francs or 0.41 percent.