Agribusiness company Syngenta AG (ADR) SYT is expecting profits to decline this year over last year. Mike Mack, CEO of Syngenta, was on CNBC Wednesday, February 4 to explain why he is pushing lower guidance for the year.
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Why Do You Expect Profits To Fall This Year?
“With lower crop prices, this is lower crop prices, but we had lower crop prices a year ago,” Mack said.
“Now, the difference between last year and now is that the farmers this year were selling into at lower commodity price. The profits are going to be down a little bit relative to last year and we just really imagine that’s what’s going to be a bit more bearish themselves on inputs and expense management.”
He continued, “So, we are erring on the side of caution and of course that caution, Carolyn, has to be underpinned by what’s going on over in Russia, the CIS, where the
ruble and the Ukrainian hryvnia continue to depreciate relative to the dollar and that’s pressurizing what for us is a good size business over there.”
How Difficult Is Pricing In This Environment?
“Well, pricing in the Russian CIS of course we are doing and did last year, we dollarized a lot of that as a way and we had to put our prices up significantly,” Mack said.
“And I am going to give you an example, $160 million of currency impact in Russian the CIS alone last year of that we were able to recover about $80 million of it through pricing, but we still took some $80 million dollars a hit to the bottom-line on that. So, it’s material.”
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