Back to top

Analyst Blog

Syngenta AG (SYT - Analyst Report) reported the financial results for 2013, with earnings per share, excluding restructuring and impairment charges, coming in at $19.30 (or $3.86 per ADR), down 12.4% from $22.03 reported in 2012.

Earnings per ADR of $3.86 lagged the Zacks Consensus Estimate of $4.34.

Revenues

In the reported year, sales increased 5% to $14,688 million compared with 2012, at constant exchange rates (CER), due to 3% increase in volumes along with 2% rise in prices. Revenues were lower than the Zacks Consensus Estimate of $14,707 million.

Europe, Africa and Middle East (EAME), Latin America and Asia Pacific witnessed a healthy performance with sales growing 6%, 7% and 6% year over year, respectively, on a CER basis. However, revenues declined 2% in North America and 7% in Lawn and Garden segment.

Margins

Gross profit margin in the reported period fell 370 basis points (bps) year over year to 45.5%, on a CER basis. Earnings before interest, taxes, depreciation and amortization (EBITDA) margin in the reported year was 19.0%, down 290 bps year over year, on a CER basis.

Adjusted operating income in the EAME segment increased 11% year over year to $1,448 million, while the same increased 6.9% year over year to $540.0 million in the Asia Pacific segment. Lawn and Garden segment’s adjusted operating income increased 54.5% year over year to $119.0 million, on a CER basis. Also, adjusted operating profit in the Latin America increased 1.3% year over year to $1,020 million.

Adjusted operating income for North America segment declined 21.4% to $1,074.0 million.

Balance Sheet/Cash Flow

Exiting 2013, Syngenta had cash and cash equivalents of $902.0 million, against $785.0 million on Jun 30, 2013. Financial debt and other non-current liabilities were $1.8 billion roughly flat compared with the preceding half year.

In 2013, Syngenta generated cash flow from operating activities of $1.2 billion, down from $1.4 billion in 2012. Capital expenditure in 2013 amounted to $625.0 million, up from $508.0 million incurred in 2012.

During 2013, Syngenta paid dividends totaling $921.0 million, along with share repurchases worth $66.0 million.

Outlook

In 2014, management expects growth in integrated sales in a similar range as 2013. Gross margin is expected to increase in the coming quarters. Free cash flow before acquisitions is expected to reach $1.5 billion in 2014.

Moreover, the company expects to reach a sales target of $25 billion by 2020. Also, EBITDA margin is targeted in the range of 24%–26% by 2018. It is also expected that the cash return to investors will continue increasing via a hike in dividend payments.

Other Stocks to Consider

Syngenta currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Gruma S.A.B. de CV (GMK - Snapshot Report), Archer Daniels Midland Company (ADM - Analyst Report) and Bunge Limited (BG - Snapshot Report). While Gruma and Archer Daniels sport a Zacks Rank #1 (Strong Buy), Bunge Limited carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.