Syngenta Abandons Goal for 2010 Earnings Growth as Inventories Hurt Prices
Syngenta AG, the world’s biggest maker of agriculture chemicals, said first-half profit declined 11 percent as burgeoning inventories of pesticides and crop-care products in North America hurt pricing.
Net income fell to $1.25 billion, or $13.39 a share, from $1.4 billion, or $14.96 a share, a year earlier, the Basel, Switzerland-based company said in an e-mailed statement. Profit fell short of the $1.38 billion predicted by analysts in a Bloomberg survey. Sales advanced 1 percent to $6.74 billion.
North American customers with full inventories of agrochemicals damaged Syngenta’s pricing power in the period, eclipsing the company’s sustained growth in emerging markets. The Swiss maker of the Axial weed killer reported a pick-up in business in the second quarter and predicted annual earnings will match last year’s level.
“In the second half of 2010 we expect positive volume momentum to continue,” Chief Executive Officer Michael Mack said in the statement. “As we approach the main season in Latin America, we are assuming that the current favorable fundamentals will support further growth in our business there.”
Syngenta has fallen 17 percent this year in Zurich trading, cutting its market value to 22.9 billion Swiss francs ($22 billion), and trailing the 1.9 percent decrease of the 15-stock Bloomberg Europe Chemicals Index.
The Swiss company reported a “noticeable” acceleration at its seeds business in the second quarter.
Syngenta, which spent almost $1 billion on research last year, is reaping the reward of introducing a so-called triple stacked corn seed that’s been engineered to resist weed killers and pests. It began marketing the genetically modified seed in the U.S. in 2008, stepping up its challenge to the country’s market leader, St. Louis-based Monsanto Co.