The Rising Influence of Rising Affluence

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Syngenta Posts Strong 1Q11 Sales

[SYT reports sales only (not earnings) for odd-numbered quarters. SYT’s own PR on the quarterly results is at: http://finance.yahoo.com/news/Syngenta-First-Quarter-2011-prnews-1926500570.html?x=0&.v=1 .]

http://online.wsj.com/article/SB10001424052748704628404576264321574490408.html

›APRIL 15, 2011, 5:21 A.M. ET
By GORAN MIJUK

ZURICH—The food-price rally that is hurting industries across the globe has helped Swiss agrochemicals giant Syngenta AG boost first-quarter sales and allow it to raise prices for various seeds and crop-protection products.

The Basel-based company, which said it was confident of reaching its full-year targets, said revenue for the first three months of 2011 rose 13% to $4.02 billion from $3.53 billion a year-earlier, sharply beating analysts views and boosting Syngenta's shares.

"With commodity prices at elevated levels, farmers across the world feel encouraged to invest in crops and seed protection," said chief executive Mike Mack. Although many farmers were still weighing their planting intentions, the planting season in the Northern hemisphere had a good start, Mr. Mack said.

Food prices have soared since late 2010, catapulting the United Nations' FAO Food Price Index to record highs in February. The price increases are hurting poorer economies. The sharply higher raw-material costs for products such as rice, oils and sugar have also hurt food companies such as Nestle SA and Danone SA.

Chief Financial Officer John Ramsay said this trend allowed Syngenta to raise prices selectively by 2% in the fist quarter. "And prices are holding," he said. Mr. Ramsay said that farmers' interest ran across the board, including seeds and crop-protection products for crops such as cotton, coffee and sugar cane, whose prices on commodity exchanges have jumped over the past few months.

Syngenta had been under pressure in 2009 and partly in 2010 as price cuts from increased competition and farmer reluctance to invest in new crops dented business. This has been felt most heavily in the U.S., where price cuts are still being felt today, although volumes have recently picked up in that market. Mr. Ramsay said the base effect of the price cuts will diminish in the second half of this year.

Syngenta, which competes with companies such as U.S.-based Monsanto and Dupont Co., is one of the world's largest agrochemicals companies in terms of sales, wielding a market share of some 15%, which it wants to broaden by another 2% over the next five years.

Most of the growth is expected to come from emerging markets, which already contribute some 50% to overall sales. But business in Europe is also regaining strength, especially in Eastern Europe amid increased demand for premium crop protection products and widespread adoption of high value sunflower seeds. Sales in Europe, Africa and the Middle East jumped 20%.

Analysts welcomed the strong set of figures and outlook and expect Syngenta to extend its market share in the years to come. The company's plan to bring its crop protection and seeds business closer together, which should help Syngenta to better cater to client needs and save costs.‹