BASEL, Switzerland - Sales for agrochemicals giant Syngenta AG dropped 8 percent to $1.91 billion for the first quarter of 2001 compared to the same period in 2000, which had strong sales of $2.17 billion. The company attributed the decline to bad weather, depressed commodity prices and Europe's farm crisis.
Syngenta forecast sales would pick up this year and said it had held profit margins, but its shares fell on what traders called downbeat figures that suggest the giant formed last November by merging the agribusinesses of Novartis AG and AstraZeneca PLC (for more information see Novartis And Zeneca Complete Merger) may be losing market share. Analysts noted that rivals Aventis, Bayer, Monsanto, Dow and DuPont had all done better early this year.
"At the end of the year the negative variance will be smaller than what it is today," Syngenta Chief Financial Officer Richard Steiblin told financial analysts of the sales drop. However, he did not want to reveal to analysts whether full-year sales will match 2000 levels or whether Syngenta was losing market share until the completion of the northern hemisphere's planting season. Steiblin told Reuters he was "pretty confident" about the future but said it was too early to make a 2001 profit forecast.
As already signaled in March, a slow start to the 2001 season with prolonged adverse weather conditions reduced early demand for Syngenta Crop Protection products. Some recovery in the sales trend is expected during the remainder of the year.
Steiblin also stressed that Syngenta's sales drop looks worse than it is because of the comparisons with "a very strong first quarter of 2000, which is not the case for everybody in the industry. Last year we grew seven percent in a flat market."
Sales of crop protection products, where Syngenta is market leader, fell 10 percent to $1.52 billion. Turnover in seeds, where the company is global number three, dipped two percent to $387 million.
Analysts expect top-line growth - 2000 sales rose just two percent - to remain minimal in the next few years, leaving cost savings as the key driver of earnings. Syngenta is aiming to achieve $525 million a year of synergies by 2004.
Steiblin said Syngenta was well on track to achieve its goal of saving an additional $90 million in costs this year after wringing out $100 million in merger synergies last year.
For more information about Syngenta visit www.syngenta.com.