Syngenta Eyes More Earnings Growth in 2012
Syngenta, the world's largest agrochemicals company, is aiming for higher earnings this year as price hikes and cost-cuts are expected to help it offset the impact of the strong Swiss franc and raw material prices.
Syngenta, which makes products to kill weeds and bugs as well as genetically modified seeds, posted a 14 percent rise in full-year net profit to $1.599 billion, just beating the average estimate of $1.566 billion in a Reuters poll.
Farmers, seeking to boost yields and offset inflation, have been buying more products from Syngenta and rivals, such as DuPont and Monsanto, on the back of higher wheat, corn and soybean prices.
Syngenta is now aiming to increase prices by between 2 and 3 percent this year after raising them by 4 percent last year, finance chief John Ramsay told Reuters on Wednesday.
"We are going into the season with good momentum," Ramsay said.
These price hikes along with expected cost savings of $190 million in 2012 should help the group to offset headwinds from the Swiss franc and raw material prices and allow it to improve earnings again this year, Ramsay said.
Syngenta said it was sticking to its goals to make savings of $650 million by 2015.
The company also reiterated it is aiming for a margin on an earnings before interest, tax, depreciation and amortisation (EBITDA) level of 22-24 percent by 2015.
Strong demand from emerging markets is also driving growth at Syngenta, but Ramsay warned a drought in Latin America would have an impact on the group's first-quarter results without going into more detail.
Last month, Monsanto posted a forecast-beating first quarter profit thanks mainly to its growing business in Brazil and Argentina and good demand for seeds for the spring planting season in the United States.
Syngenta also proposed a hike in its dividend to 8 Swiss francs from 7 francs, and said it planned to repurchase shares for around $200 million in 2012.
The group is also on the prowl for acquisitions to bolster its seeds unit.