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Bayer : Syngenta profits hit by U.S./China trade wars, bad weather

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07/19/2019 | 07:19am EDT
FILE PHOTO: Logo of Swiss agrochemicals maker Syngenta in Geispitzen

ZURICH (Reuters) - Agricultural chemical maker Syngenta on Friday reported a 34% fall in first-half net income, showing the impact of U.S. trade disputes with China and Mexico as well as bad weather in some of its markets.

Basel-based Syngenta was bought in 2017 by state-owned ChemChina for $43 billion (£34.34 billion), which aims to capitalise on the group's agricultural technology.

Syngenta's first-half sales fell 7% to $6.8 billion, while net income tumbled 34% to $798 million, in part due to the bad weather and global issues.

Chief financial officer Mark Patrick, when asked whether Syngenta faced any legal action relating to week-killing agent glyphosate, said the company had not been named in litigation involving glyphosate.

"To date, Syngenta has not been named in any of the glyphosate suits," Mark Patrick said on a call.

Syngenta sells products based on glyphosate in some markets, but Patrick said U.S. sales have been scaled back.

"Latin America is a big user of glyphosate, and Syngenta sells that there," he said. "We do not sell glyphosate solo in the United States anymore. We sell it in mixtures, but we have not sold glyphosate solo for many years."

Syngenta has sold glyphosate herbicide under the brand name Touchdown.

German rival Bayer, which bought Monsanto for $63 billion last year, has faced multibillion lawsuits linked to glyphosate. More than 13,400 plaintiffs alleged the company's glyphosate weedkiller caused cancer - a claim Bayer contests.


Syngenta's first-half was hit by flooding in the United States, drought in Australia and political headwinds.

Syngenta said it was taking charges to shutter a plant in Houston, Texas, after a chemical it produces, chlorothalonil, was banned by the European Union this year on concern over risks to bees, waterways, fish, and humans. [https://bit.ly/2xRJdGT]

Global trade spats also took their toll.

In the United States, soybean growers this year were left sitting on record volumes of beans after China halted purchases, while the U.S. has imposed tariffs on imports of products including Mexican tomatoes.

"It's across vegetables, obviously tomatoes are a big component of that," Patrick said. "Just the economics now with these tariffs has meant it's had impacts on Mexican farmers. It goes to resolution of current trade disputes that are ongoing between the United States and a number of geographies."

Patrick reiterated ChemChina's previously announced aim of floating at least part of the company by 2022, though he said the impact of volatile weather on Syngenta's financial fortunes would play a role in a final IPO decision.

"Mother Nature is wonderful thing, she has a great tendency to stay one or two steps in front of all of us," he said.

(Reporting by John Miller; Editing by Jan Harvey and Jane Merriman)

By John Miller

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Financials (EUR)
Sales 2019 46 199 M
EBIT 2019 8 364 M
Net income 2019 3 352 M
Debt 2019 37 554 M
Yield 2019 4,42%
P/E ratio 2019 20,2x
P/E ratio 2020 13,7x
EV / Sales2019 2,11x
EV / Sales2020 2,00x
Capitalization 60 140 M
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