Syngenta's 1H14 Earnings and Revenues Rise Y/Y

Syngenta AG SYT recently reported financial results for the first half of 2014 (ended Jun 30, 2014). Earnings per share, excluding restructuring and impairment charges, came in at $15.60 (or $3.12 per ADR), down 2.0% from $15.92 reported in the first half of 2013.

Revenues

In the reported half year, sales climbed 1% year over year to $8,508 million year over year. At Constant Exchange Rate (CER), revenues increased 4% backed by price and volume gains.

EAME (Europe, Africa, Middle East), Latin America and Asia Pacific witnessed a healthy performance with sales growing 7%, 11% and 10% year over year, to $3.3 billion, $1.3 billion and $1.1 billion, respectively, on a CER basis. However, revenues declined 7% in North America to $2.4 billion and remained flat in Lawn and Garden segment at $364 million.

Margins

Gross profit margin in the reported period increased 100 basis points (bps) year over year to 49.6%, on a CER basis. Earnings before interest, tax, depreciation and amortization (EBITDA) margin was 26.6%, up 60 bps year over year, on a CER basis.

Adjusted operating margin in the EAME segment decreased 190 bps year over year to 38.9%, while the same declined 560 bps year over year to 29.2% in the North America segment. Lawn and Garden segment's adjusted operating income fell 270 bps year over year to 14.7%.

Also, adjusted operating profit in Latin America increased 90 bps year over year to 17.4%. Adjusted operating income for Asia Pacific segment improved 20 bps to 28.0%.

Balance Sheet/Cash Flow

As of Jun 30, 2014, Syngenta had cash and cash equivalents of $865.0 million, against $902.0 million on Dec 31, 2013. Financial debt and other non-current liabilities were $3.0 billion, up from $1.8 billion in the preceding half year.

In the first six months of 2014, Syngenta generated cash flow from operating activities of $195.0 million, compared with $68.0 million cash used in the last-year comparable period. Capital expenditure amounted to $268.0 million, up from $220.0 million incurred in six months ended Jun 30, 2013.

During the reported period, Syngenta paid dividends totaling $1.0 billion, along with share repurchases worth $48.0 million.

Outlook

In the second half of 2014, management expects sales growth on the back of increased demand in the Latin America segment. On a CER basis, the company expects to witness integrated sales growth of 6% year over year. Free cash flow before acquisitions is expected to reach $1.3 billion in 2014.

Other Stocks to Consider

With a market capitalization of $32.9 billion, Syngenta holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Yara International ASA (YARIY), Limoneira Company LMNR and Chemical & Mining Co. of Chile Inc. SQM. While Yara International sports a Zacks Rank #1 (Strong Buy), Limoneira and Chemical & Mining Co. hold a Zacks Rank #2 (Buy) each.

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