Customer focus, productivity and innovation gaining momentum
– Sales USD 7.25 billion: 5 % higher, up 7 % adjusted for the sugar beet seed and mandated crop protection antitrust divestments
– Crop protection: sales up 6 %, 8 % excluding divestments
– Seeds: sales flat, 5 % higher excluding the sugar beet divestment
– EBITDA USD 1.7 billion: up 1 %, 8 % excluding divestments; margin 23.4 % (H1 2017: 24.2 %)
– Free cash flow before acquisitions USD 178 million (H1 2017: USD 21 million)
Erik Fyrwald, Chief Executive Officer, said: “In the first half of this year we delivered sales growth of 5 % compared to H1 2017, 7 % when adjusted for antitrust and sugar beet divestments. The result is an encouraging outcome given difficult market conditions and we continue to focus on serving customers to help improve their profitability and sustainability.
It is pleasing that we have returned to growth, on an adjusted basis, in all regions, particularly in Brazil where a solid performance was achieved after several years of declining sales. Global productivity programs helped off-set higher raw material and logistics costs, limiting the impact on EBITDA margin.
Looking ahead, we will continue to strive to serve customers with quality crop protection and seeds products reliably delivered and with new technology that enhances performance for farmers everywhere. We continue to aggressively drive productivity, thereby minimizing the margin impact, despite the continued pressure from higher oil prices, short supply of many key chemical ingredients and increased logistics costs.”
Financial highlights 1st Half 2018
Sales USD 7.2 billion
Sales of USD 7.25 billion were up 5 %, 2 % at constant exchange rates (CER) versus H1 2017. Divestments reduced reported growth by 2 %. Crop protection sales of USD 5.50 billion increased 6 % against H1 2017, 3 % at CER despite antitrust divestments reducing sales by 2 %. Seeds sales of USD 1.75 billion were flat against the first half of 2017 but 5 % higher when adjusted for the 2017 sugar beet divestment.
EBITDA USD 1.7 billion
EBITDA was 1 % higher than 2017, up 8% excluding divestments. The EBITDA margin was 23.4 % (H1 2017: 24.2 %) with reported margin reduced by the divestments.
Net income USD 1.2 billion
Net income was USD 1,229 million (H1 2017: USD 928 million) with higher interest costs after the recent bond issue and an increased tax rate following the US tax reform being more than offset by lower restructuring and impairment costs and the gain from antitrust divestments.
Free Cash Flow USD 178 million
Free cash flow before acquisitions was USD 178 million (2017: USD 21 million). Free cash flow in the first half of 2018 included divestment proceeds of USD 408 million related to antitrust divestments and initial payments under the US litigation settlement agreements of USD 450 million; in 2017, free cash flow was net of USD 276 million one-off payments for the cash settlement of employee share plans following the ChemChina transaction.
Regional sales performance
Sales in Europe, Africa and the Middle East were down 1 % against last year but up 7 % on an adjusted basis, despite adverse spring weather.
In North America crop protection sales were up 4 % against adjusted 2017, with solid sales in the United States more than off-setting a slow start in Canada due to cold weather. Seeds sales were 2 % higher on an adjusted basis, despite reduced corn and soybean acres.
In Latin America sales volumes in crop protection improved, particularly in Brazil, resulting in first half sales being up 12 % against the first half of 2017. Solid growth in crop protection more than offset reduced seed sales which were impacted by reduced second season corn acres. The integration of Nidera Seeds is progressing well.
In Asia Pacific sales were up 8 % against H1 2017 driven by strong performances across both the crop protection and seeds portfolios.
Stronger first half sales of crop protection and vegetable seeds in China, helped drive growth of 16 % adjusted for the divestments.
Syngenta is a leading agriculture company helping to improve global food security by enabling millions of farmers to make better use of available resources. Through worldclass science and innovative crop solutions, our 28000 people in over 90 countries are working to transform how crops are grown. We are committed to rescuing land from degradation, enhancing biodiversity and revitalizing rural communities.