July 27, 2010

Syngenta signs up help to boost weedkiller sales

Syngenta has signed up an anti-pest treatment developed by agrichemicals minnow Plant Health Care to fight back in generalist weedkillers, whose falling sales were at the heart of a profits downgrade last week.

The world's biggest farm chemicals group is to develop and market Plant Health's harpin protein for inclusion in its glyphosate weedkillers, for which prices have plunged thanks to competition from generic alternatives being produced in large quantities by Chinese rivals.

Mixing in harpin, could improve crop yield and plant performance, said Ken Fister, who is in charge of Syngenta's herbicide brand management.

Last week, Syngenta noted prices of its non-selective weedkillers, which include the Touchdown glyphosate brand, coming down sharply in the US market as the Swiss-based group ditched hopes of a rise in full-year profits, according to reports.

The warning prompted a string of downgrades which continued on Monday, when Nomura analysts cut their price target on Syngenta stock to SFR265 from SFR320, giving the shares a "neutral" rating.

However, the deal lifted hopes for Plant Health Care shares, which soared 11% in London.

Chief executive John Brady said that the Syngenta sign-up represented a second landmark agreement for harpin, which helps plants fend off nematode worms, including the cyst nematodes that are a major threat to soy crops.

Analysts said that the deal bolstered the company's valuation, even though it was unlikely to have any impact on its profits for three-to-four years, with approval from US authorities likely to take three years.

Harpin has already been licensed to Monsanto, which is using it as a seed coating.