Swiss agribusiness firm Syngenta AG (SYT) Wednesday reported a decline in the first-half net income mainly reflecting the absence of prior year's milestone corn rootworm trait royalty income. Underlying earnings per share grew 9 percent as sales were benefited by double-digit growth in emerging markets, despite poor performance in North America.
Syngenta said underlying integrated sales growth was seven percent in the first half despite unfavorable weather and late planting in the northern hemisphere, reflecting the success of full commercial integration and the company's ongoing expansion in emerging markets. Underlying profitability improved with price increases across all product lines and tight control of operating expenses, even as seeds production costs increased.
Chief Executive Officer Mike Mack said, "Our performance in the first half attests to our ability to achieve sustainable growth in both emerging and developed markets and reinforces our confidence in achieving integrated sales of $25 billion in 2020."
The company's first-half net income attributable to shareholders declined 5 percent to $1.41 billion, or $15.23 per share, from last year's $1.49 billion, or $16.17 per share. Excluding restructuring and impairment charges, earnings per share stood at $15.92 during the period, down 7 percent from $17.03 a year ago. However, underlying earnings, which excluded last year's $256 million corn rootworm trait royalty income, increased 9 percent.
EBITDA amounted to $2.18 billion in the latest quarter, a 3 percent decrease from last year on a reported basis, and a 5 percent drop on constant currency basis.
On the other hand, sales for the six months increased 2 percent, on both reported and constant currency basis, to $8.39 billion from last year's $8.27 billion. Underlying integrated sales, adjusted for corn rootworm trait revenue in 2012, advanced 7 percent at constant exchange rate with volume up 4 percent and prices up 3 percent.
For the second quarter, group sales dropped 4 percent to $3.82 billion from last year's $3.96 billion due to lower sales at Europe, Africa and Middle East, as well as North America, even as Latin America and Asia Pacific performed well. In the quarter, crop protection sales grew 3 percent, while sales of seeds plunged 20 percent mainly due to corn and soybean seed sales.
Looking forward, the company sees an acceleration of underlying sales growth in the second half of the year, based on the positive outlook for Latin America and Asia Pacific.
For the full year, Syngenta said it remains on track to deliver sales growth in line with its longer term objective, and expects to achieve growth in underlying earnings and to generate substantial free cash flow. For year 2015, it maintained EBITDA margin target in the range of 22 to 24 percent.
On Tuesday, Syngenta shares declined $0.08 or 0.10 percent on the NYSE to close at $83.
by RTT Staff Writer
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