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Syngenta (SYT) Q3 Results Hurt by Currency & Credit Woes

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Premium agricultural chemicals company Syngenta AG reported weak trading results for third-quarter 2015, largely affected by headwinds associated with unfavorable weather, weak commodity prices, currency volatilities and tight credit conditions.

Syngenta’s integrated sales for third-quarter 2015 totaled $2.5 billion, down 12.3% year over year. Group sales, including revenues from the Lawn and Garden segment, totaled $2.6 billion, down 12.1% year over year.

In third-quarter 2015, Syngenta’s sales from Europe, Africa and the Middle East (EAME) region declined a marginal 1% year over year at constant exchange rate (‘‘CER’’). Quarterly sales in the region stood almost flat year over year despite dry climatic conditions during the summers. The company’s Seedcare campaign helped augment its Crop Protection business in the EAME zone. However, reduced acreage hampered the corn sales and weighed on the aggregate revenue generated from the region.

The company’s North American sales dropped 22% year over year to $390 million at CER. Excessive competition in the soybean market, reduced glyphosate production, lower commodity market prices and weak selective herbicide sales were mainly responsible for the year-over-year fall in sales.

Sales from the Asia Pacific were $349 million, down 9% year over year at CER. Extensive droughts in The Association of Southeast Asian Nations (‘‘ASEAN’’) nations and poor monsoon in India were two major reasons behind the year-over-year sales decline.

However, Syngenta’s Latin American sales for third-quarter 2015 increased 13% year over year to $1233 million at CER, mainly driven by favorable changes introduced in Brazil’s terms of sales.

Sales generated from the company’s Lawn and Garden division totaled $135 million, up 4% year over year at CER. Increased usage of Turf & Landscape supported the year-over-year growth.

Syngenta anticipates negatives such as tight credit conditions and unlikely currency fluctuations in Brazil to adversely affect its results in the upcoming quarters. However, backed by a robust risk management system and its new Accelerating Operational Leverage program, the company intends to generate adequate free cash flow for financing future investment plans. Nevertheless, based on the current market scenario, the company does not expect to meet its conventional sales guidance for full-year 2015.

Stocks to Consider

Syngenta currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Atlas Iron Limited , Asanko Gold Inc. (AKG - Free Report) and Albemarle Corporation (ALB - Free Report) . All three stocks hold a Zacks Rank #2 (Buy).

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