Syngenta's 2015 Earnings & Revenues Fall Y/Y, Shares Slide

Syngenta AG SYT recently reported weak financial results for full-year 2015 (ended Dec 31, 2015). Post declaration of the results on Feb 3, 2016, the company's share price slipped 1% to close the session at $79.72. Management cited unfavorable currency translations, unstable performance in emerging markets and low crop prices as the main reasons behind the dismal annual results.

For 2015, earnings per share, excluding restructuring and impairment charges, came in at $17.78 (or $3.56 per ADR), down 8.4% from $19.42 reported at 2014-end.

Revenues

In fourth-quarter 2015, the company's total sales were $3,161 million, down 13% year over year. While North American sales increased 25% year over year to $790 million; revenues from EAME (Europe, Africa, the Middle East), Latin America and Asia Pacific hubs decreased 15%, 29% and 10% on a year-over-year basis, to $580 million, $1,739 million and $515 million, respectively. During the quarter, revenues from Lawn and Garden segment were $188 million, up 3% year over year.

For full-year 2015, sales fell 11.4% year over year to $13,411 million. The company's sales for EAME, North America, Latin America and Asia Pacific region witnessed year-over-year decline of 15%, 5%, 15% and 10% to $3.884 million, $3410 million, $3,623 million and $1,837 million, respectively. For 2015, the company's Lawn and Garden segment revenues were $648 million, down 7% year over year.

Margins

In 2015, earnings before interest, tax, depreciation and amortization (EBITDA) margin was 20.7%, up 140 basis points year over year. Operating margin was 13.7% compared with 13.9% recorded at 2014-end.

Cash Flow

Syngenta's free cash flow before acquisitions came in at $806 million as against $1,172 million recorded at 2014-end. Business working capital, as a percentage of sales, was 38% compared with 34% recorded at the end of 2014. Capital expenditure (fixed inclusive of intangibles) stood at $571 million during the quarter.

Outlook

Despite challenging market conditions, Syngenta remains firm in its aim to enhance profitability in 2016. The company intends to improve margins on the back of its strategic accelerating operational leverage AOL program and reduction of raw input expenses. The company also plans to improve sales in the near future with the help of a sales force improvement program.

Stocks to Consider

Syngenta presently carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the industry include Cosan Limited CZZ, Barrick Gold Corporation ABX and Agnico Eagle Mines Limited AEM. All three stocks hold the same Zacks Rank as Syngenta.

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