Syngenta AG Chief Executive Officer Michael Mack said Latin American demand for the Swiss company’s agrochemicals is key to offsetting the seed-inventory writedown and currency costs that threaten this year’s profit goal.
Adjusted earnings per share may be "close to last year’s underlying level," depending on markets like Brazil, the Basel- based company said today. It predicted earlier that earnings would "substantially improve."
Syngenta, the world’s largest maker of crop chemicals, is pinning its hopes on Brazilian farmers buying more pesticides and fungicides for soybeans and other crops to take advantage of the real’s depreciation that’s driving exports. Third-quarter revenue met estimates, with Latin America sales growing 17 percent at constant exchange rates.
"It’s all going to come down to Latin America," Mack said in a phone interview. "There was a question about whether or not we would be able to get a full 8 percent sales growth in 2013: It looks like we are set to do that. We feel good coming in to the fourth quarter."
Syngenta rose 0.7 percent to 356.8 francs as of 9:37 a.m., shrugging off a decline at the open of trading in Zurich.
While sales earlier in the year were affected by cold weather in Germany and the U.S., quarterly revenue matched analysts’ estimates, rising 8 percent to $2.9 billion.
The writedown on unsold corn seeds may be about 1 percent of full-year sales, Chief Financial Officer John Ramsay said in an interview. Depreciating emerging-market currencies will also halve a projected foreign-exchange gain to $50 million from $100 million, he said.
Mack, who became chief in 2008, wants to almost double sales to $25 billion by 2020, buoyed by a companywide reorganization along crop lines and purchases of new technologies. During his tenure, Mack has stepped up the pace of acquisitions and branched out into new business areas beyond seeds and crop chemicals such as automated rice planting.
The company is waiting for Brazilian approval of soy fungicide Solatenol, which could eventually bring annual sales of more than $850 million, he said.
"We are literally waiting on it each and every morning. It’s in cardboard boxes," Mack said. Syngenta will lose $100 million in sales if it’s not approved this year, he said. Solatenol has been fast-tracked and approval was expected by Oct. 15, Brazil’s Agriculture Policy Secretary Neri Geller said in an interview published Sept. 27.
The company reiterated a forecast of $25 billion in sales by 2020 and an earnings before interest, taxes, depreciation and amortization margin in the range of 22 to 24 percent by 2015.
--Editors: Andrew Noel, Tom Lavell
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