Syngenta Posts Lackluster Q1 Trading Results, Raises Outlook

Premium agricultural chemicals company Syngenta AG SYT reported weak trading results for first-quarter 2016. The company's performance was largely affected by headwinds associated with unfavorable weather, weak commodity prices, currency volatilities and tight credit conditions.

Syngenta's integrated sales for first-quarter 2016 totaled $3.6 billion, down 7.4% year over year. Group sales, including revenues from the Lawn and Garden segment, totaled $3.7 billion, down 6.8% year over year.

In first-quarter 2016, Syngenta's sales from Europe, Africa and the Middle East (EAME) region was $1.7 billion, up 6% year over year at constant exchange rates (CER). The year-over-year increase was attributable to increase in the volume of certain products like fungicides, selective herbicides and sunflower seeds. Quarterly sales were even higher due to significant execution of price increases.

The company's North American sales dropped 2% year over year at CER to $986 million. The year-over-year decline stemmed from a fall in glyphosate price, which affected the company's crop protection business.

Sales from the Asia Pacific were $430 million, down 10% year over year at CER from the value recorded in the year-ago period. Quarterly sales weakened due to Thailand's depressed rice market as well as adverse climatic conditions in certain countries.

Latin American sales for first-quarter 2016 plunged 12% year over year at CER to $399 million. Sales in the region had declined year over year due to lower insecticides sales and credit constraints in Argentina and Brazil.

Sales generated from the company's Lawn and Garden division totaled $180 million, up 10% year over year at CER. Quarterly sales increased due to vector control in the Middle East and Africa and Landscape in the United States.

Outlook

Syngenta aims to enhance its full-year 2016 sales by catering to higher demand amid new product launches. The company's ongoing Accelerating Operational Leverage AOL program is expected to generate additional savings worth $300 million by the end of the current fiscal year.

Moreover, reduction in prices of raw inputs is expected to enhance the company's aggregate profitability in the quarters ahead. New joint ventures, disinvestment options and acquisitions are largely expected to boost revenues and margins in the near term.

Stocks to Consider

Syngenta presently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Alamos Gold, Inc. AGI, Eldorado Gold Corp. EGO and Air Products and Chemicals, Inc. APD. All the three companies currently hold a Zacks Rank #2 (Buy).

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