Syngenta Profit Margin to Narrow on Currency Moves, Sales Mix

Oct. 16 (Bloomberg) — Syngenta AG, the world’s largest maker of crop chemicals, said margins will narrow this year on currency moves and sales of less-profitable weed killer glyphosate.

Revenue increased 2 percent to $3 billion in the third quarter, Syngenta said today. That’s in line with an average estimate of five analysts in a Bloomberg survey. The company stuck to a forecast for integrated sales growth of 6 percent at constant exchange rates, with an expected acceleration in the fourth quarter.

“For the first nine months of this year profitability has been affected by adverse currency movements and sales mix,” Chief Executive Officer Mike Mack said in a statement. “As a result, the full year Ebitda margin will be below last year’s level.”

Mack has pledged to cut $1 billion in costs by 2018 to boost efficiency after currency swings and a writedown from producing too many corn seeds in the U.S. erased profit last year. Syngenta, which makes chemicals to destroy weeds, kill insects and treat crop diseases, had predicted sales would accelerate in the second half on gains in Latin America and the launch of Elatus in Brazil, a fungicide that counters soybean rust.

Sales of Elatus have exceeded $200 million so far this year.

“Performance in the second half of the year is primarily driven by Brazil, where the season is just now under way and is still dependent on rainfall,” he said.

The Basel-based company was the target of a takeover approach, later abandoned, by rival Monsanto Co. earlier this year, according to people familiar with the matter. Syngenta also competes with BASF SE, Bayer AG, and DuPont Co.’s Pioneer subsidiary.

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