Syngenta Cuts Guidance After Profit Drops In H1 2010
Syngenta cut its outlook and is now expecting profit to fall this year as a late start to the farming season following a harsh winter and higher taxes weigh, the group said on Thursday.
Bad weather had delayed the planting season in the northern hemisphere, but demand picked up in the second quarter, especially in emerging markets, Chief Executive Mike Mack told Reuters in an interview.
The group now expects a strong second half, he said.
"We expect operating income around last year's level but a lower net profit," Mack said, adding that increased net financial expenses and a higher tax rate were set to weigh on the bottom line.
Net profit for the world's largest agrochemicals group fell 11% to $1.25 billion in the first six months, falling short of an average forecast of $1.38 billion in a Reuters poll.
Sales increased 1% to $6.74 billion, Syngenta said in a statement, slightly ahead of analysts' expectations. Emerging markets such as Latin America and Asia-Pacific are increasingly important for the group.
"This is the year where Syngenta could have more of its sales in emerging markets than in developed markets," Mack said.
Shares in agrochemicals groups have fallen this year as the sector struggles with fierce competition from cheap Asian herbicides and uncertainty regarding the regulation of genetically modified crops.
Syngenta's stock, which trades at around 12.5 times forecast 2011 earnings, at a discount to American seed maker Monsanto but at a premium to other European chemicals companies, lost about a fifth of its value since this year's high in March.