ZURICH: Swiss group Syngenta, the world's largest agrochemicals company, is eyeing further sales growth for the full-year after third-quarter sales jumped 21 percent, beating expectations thanks to strong demand in Latin America.
The maker of genetically modified seeds as well as products to kill weeds and bugs said quarterly sales had risen to $2.7 billion, compared with a forecast for $2.48 billion in a Reuters poll.
At 0831 GMT, Syngenta shares were trading 3.9 percent higher, outperforming a 1.9 percent rise in the European chemicals sector.
Syngenta, which has been able to raise crop protection prices 3 percent, said on Friday it had seen a good start to the Latin American season, with strong demand from soybean growers in Brazil and Argentina.
"Demand for agricultural produce is continuing to grow unabated," finance chief John Ramsay told Reuters. "Basic demand and supply is keeping crop prices resilient. But you always get some volatility associated with commodity markets."
The group now expects substantial top line growth, higher profitability at constant exchange rates and a significant increase in free cash flow in 2011.
"Our investment case is based on strong agro fundamentals and the successful implementation of the new corporate strategy remains unchanged. We expect the positive momentum to continue in the fourth quarter and hence reiterate our Buy rating," Vontobel analyst Patrick Rafaisz said.
Spiralling wheat, corn and soybean costs have been encouraging farmers to buy more products from Syngenta, and rivals such as DuPont and Monsanto, as they seek to boost yields and offset inflation.
Syngenta is aiming to push through mid-single digit price increases next year, particularly in crop protection. It is also comfortable its newly integrated sales model is starting to deliver, Ramsay said.
Higher prices should allow Syngenta to further improve profitability next year, helping it to move closer to its mid-term goals, Ramsay said on a conference call.
Syngenta is aiming for a margin on an earnings before interest, tax, depreciation and amortisation (EBITDA) level of 22-24 percent by 2015.
Earlier this month, Monsanto posted forecast-beating sales thanks to global growth in both corn and cotton sales.
Comments
Comments are closed.