In the first quarter of 2016, Syngenta Group sales of $3.7 billion including Lawn and Garden were unchanged at constant exchange rates compared with the first quarter of 2015. Reported sales were seven percent lower, with the dollar remaining strong for most of the quarter.
First quarter integrated sales by region at CER
Integrated sales of $3.6 billion were unchanged at constant exchange rates. Volumes were two percent lower. Prices were two percent higher, driven in part by increases in the CIS to offset the impact of currency depreciation.
Sales in Europe, Africa and the Middle East rose by six percent compared with a strong first quarter in 2015. Growth was achieved despite subdued grower sentiment, notably in France, as a result of low crop prices. In the CIS further significant price increases were implemented while volumes also increased, driven in particular by sunflower seeds, fungicides and selective herbicides. Sales in South East Europe were also robust.
In North America, sales were two percent lower. Seeds sales increased with a strong performance in corn, largely due to trait licensing revenue. Crop protection sales were lower, partly due to the deliberate reduction in glyphosate. Fungicides showed broad-based growth with a significant contribution from new products. Full year performance in crop protection will be driven by innovation, with 16 new products scheduled for launch.
Sales in Latin America were 12 percent lower. Excluding glyphosate and the change in sales terms implemented in 2015, sales were one percent lower. This is a resilient performance in the context of continuing credit constraints in Brazil and Argentina and delayed sales in Venezuela. In addition, insecticides sales were affected by low pest pressure and the consumption of prior year channel inventories.
In Asia Pacific sales were 10 percent lower as a number of countries continued to be affected by adverse weather effects resulting from El Niño. The rice market in Thailand remains depressed as rice stocks are drawn down and government support for growers is reduced.
New product launches and innovation pipeline
The new fungicides Orondis and Solatenol are now registered in the USA and Canada and are being sold for the 2016 season. Solatenol is also expected to be introduced in France for the 2016/2017 season, subject to registration. In addition, another new carboxamide (SDHI mode of action) fungicide Adepidyn is expected to be launched in Latin America South during the next planting season, subject to registration. Adepidyn and Orondis are the first launches from the new crop protection pipeline, which has a total peak sales potential of over $4 billion.
John Ramsay, Chief Executive Officer, said: “For the full year, our target of maintaining sales at constant exchange rates is underpinned by the contribution of new products. We are continuing our focus on Accelerating Operational Leverage (AOL) and are on track to realize our raised 2016 target of $300 million in incremental savings. Profitability will further benefit from a reduction in raw material costs. The AOL program also targets a release of working capital, which will contribute to an increase in free cash flow for the year to over $1 billion.
“Over recent months we have reviewed our integrated strategy in the light of our experience over the last five years. There have been many clear successes, notably in the emerging markets, and we will continue to pursue an integrated approach where it clearly adds value. Seeds are central to grower decision-making and are indispensable to an integrated offer. We are however determined to improve the profitability of our Seeds business. We have a competitive and sustainable position in most crops but in certain areas are prepared to consider joint venture, acquisition or divestment options.”
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