September 25, 2012

 

Syngenta raises revenue targets for key crops

 

 

For its eight most important crops, Syngenta has raised revenue targets, predicting innovation and a more integrated business will more than double sales of seeds and crop protection products by 2020.

 

The Swiss firm, which last year moved to combine pesticides, fungicides, herbicides and seeds into a single division, said on Monday (Sep 24) it now expects sales of products for its eight top crops to reach US$25 billion by the end of the decade.

 

Previously, it had targeted sales for the eight fields - corn, wheat, soy, rice, sugar cane, vegetables, various field crops and speciality cultures - to reach over US$22 billion.

 

The world's top seed and crop protection companies are battling to develop new technologies that can improve productivity for farmers grappling with increasingly erratic and extreme weather conditions.

 

On Friday (Sep 21), Syngenta agreed to buy Belgian seed firm Devgen, attracted in part by its RNAi technology - a naturally occurring mechanism for the regulation of specific genes which scientists want to harness to reduce crop damage.

 

"I am pleased to say that success in both these areas (innovation and the newly streamlined business) has enabled us to increase our expectations for future growth across our eight strategic crops," said Chief Executive Mike Mack.

 

Sales of key crops reached US$12.4 billion last year. Shares in Syngenta, which competes with Monsanto, Dow AgroSciences and DuPont, were up 0.9% at CHF347.10 (US$371) by 0905 GMT, within a slightly lower European chemicals sector.

 

Analysts at Notenstein private bank said Syngenta's strategic realignment would help fend off competition from cut-price competitors. Like pharmaceutical companies, seed and crop protection firms face cheap, copycat competition, often from companies based in emerging markets.

 

Deutsche Bank analysts said the group's new forecast implied a compound annual growth rate in sales of 7.3% from 2012-20, compared with their current forecast of 5.8%.

 

"It is worth highlighting that the US$25 billion sales target is only for the eight key crops ... and we believe other crops also have the potential to grow at a similar rate," they said, keeping a "buy" rating on Syngenta shares.

 

After upgrading its sales expectations for corn and cereals in May, Syngenta said it had now also raised its outlook for rice and vegetables to a combined US$5 billion.