Syngenta sees better prospects, growth in 2010

Date:10-29-2009

Syngenta AG, the worlds largest agrochemicals maker, is more optimistic about its prospects for 2010 and sees a return to growth.

Syngenta, which makes products to kill weeds and bugs as well as genetically modified seeds, posted a 12 percent drop in third-quarter sales to $2.0 billion, hurt by adverse weather hitting demand for its pesticides, and broadly in line with forecasts.

The group confirmed its full-year guidance for earnings per share to be close to its 2008 level and chief executive Mike Mack said headwinds like currency and raw materials costs were now easing.

"Emerging markets are offering some signs of stabilization, so frankly the conditions are in place for some growth ahead next year and Im cautiously optimistic for 2010," he said in a phone interview.

Agricultural suppliers like Syngenta, as well as Canadian fertiliser Potash Corp (POT.TO) and Germanys K+S (SDFG.DE), have been struggling with lower sales as prices for farmers products have fallen.

Syngenta shares rose 3.7 percent to 260.00 Swiss francs by 0742 GMT, outfperforming the the DJ Stoxx European chemicals sector .SX4P0, which was up 1.4 percent.

"For 2010, we expect good growth on reversal of several factors -- credit cycle, currency, weather -- plus a boost from new products and capacities," said Kepler Capital Markets analyst Florian Gaiser.

Cash return or big buy?

Syngenta had said it could consider bidding for Dow Chemicals (DOW.N) agricultural sciences unit if it were put up for sale, but the U.S. group has since said it wanted to hang on to the business for now.

The Swiss group could now consider returning cash to shareholders or going after more acquisitions, and did not rule out a major buy.

"Our history also has us sometimes returning cash to shareholders in the years where were not otherwise competing with growth projects. So well take a look at all of those things," Mack said.

Syngenta trades at about 14 times forecast 2010 earnings, a discount to U.S. rival Monsanto (MON.N) and in line with the wider DJ Stoxx European chemicals sector .SX4P. "In the main, given some of the economic and weather challenges of the year we feel we the year is progressing about as well as it can," Mack added.