Coming off record profits from the highest product input prices farmers have ever paid, Syngenta Group financial results for the first half and the second quarter of 2024 reveal the tide has turned with sales for the first half of 2024 at $14.5 billion, down $3.0 billion or 17% year-on-year, when compared to a strong 2023 H1 results a year ago.
But Syngenta still kept a very good relationship with its banker as EBITDA for the first half of the year was $2.1 billion, albeit some 36% lower year-on-year. The Group’s EBITDA profit margin on sales for the first half of 2024 was 14.1%, that’s down 4.2% when compared to 18.3% derived 12 months ago in H1 2023.
Sales for the second quarter 2024 were $7.2 billion, down $1.1 billion or 14%. In Q2 2024, EBITDA was 39% lower than the prior year at $0.8 billion. Sales remained affected by significant industry-wide channel destocking in Crop Protection. Overall farmer income was lower, and distributors and retailers continued to cut inventories to address the pressure of reducing working capital amid the higher interest rate environment. These factors, in addition to a provision reduction in 2023 and an unfavorable mix, weighed negatively with the EBITDA comparison from the same period last year.
Sales were additionally impacted by lower farmer income from reduced agricultural commodity prices and unfavourable weather, especially in the United States, at the beginning of the planting season, as well as an overcapacity in the market for some commodity crop protection products.
In a challenging market, Syngenta Group introduced additional measures to enhance productivity, operational efficiency and cash flow, reducing capital expenditures and working capital. Despite the market challenges, cash flow in the first half improved significantly compared to the prior year.
With signs of market stabilisation and a lower 2023 baseline, Syngenta Group expects sales and margin improvements in the second half.
Syngenta Crop Protection sales declined in a market that remained challenging. The second quarter proved particularly difficult, with ongoing channel inventory destocking linked to the higher interest rate environment and adverse weather conditions affecting several markets. Additionally, buying patterns shifted further towards last-minute decision-making. Despite these challenges, Biologicals delivered further growth.
ADAMA experienced a weaker first half of the year, amid a challenging environment for suppliers of post-patent active ingredients. The business downturn in Asia Pacific (excluding China) and Europe continued to significantly impact the comparison. Despite lower sales, ADAMA delivered higher profitability and remains committed to accelerating its ongoing business and transformation plan, which already resulted in an improving cash flow in H1 2024.
The Seeds business delivered $2.4 billion sales in the first half of 2024, 4% lower year-on-year. Vegetables Seeds continued to show strong growth, offset by the performance of Field Crops, although sales recovered in the second quarter.
Syngenta Group China experienced a 16% sales decline in the first half of the year compared to last year’s record period. This sales decline was mainly the result of the active downsizing of low-margin business and negative currency effects, which were partially mitigated by an improved business mix.
As previously announced, ADAMA’s board of directors has appointed Gaël Hili as its President and Chief Executive Officer, effective 1 October 2024. He will succeed Steve Hawkins, who has been appointed President of Syngenta Crop Protection, also effective 1 October 2024.
Lets take a look at sales by Business divisions to see who fared best.
Syngenta Crop Protection
Syngenta Crop Protection sales were 21% lower at $6.2 billion in the first half of 2024 amid ongoing channel destocking in key markets, except for China. Sales were also impacted by adverse weather conditions across key markets, including flooding in South Brazil and heavy rains in Western Europe.
In the United States, unfavourable weather led to a delayed planting season, affecting purchasing patterns in Q2 2024. The decline in agricultural commodity prices further decreased the demand for crop inputs.
In the first six months, sales in North America were 37% lower. Sales were down 17% in Europe as well as 17% lower in Asia, the Middle East & Africa. Sales in Latin America were also 17% lower as distributors and retailers showed delayed buying behaviour. Sales in China were up 9%.
During this period, the business continued to focus on delivering innovations to farmers, including the very successful launch of ADEPIDYN® technology in the UK and India. Farmers in over 55 countries globally are now able to access this novel fungicide, which is expected to be Syngenta’s first crop protection active ingredient to achieve billion-dollar annual sales within eight years of its commercialization.
Syngenta has also forged multiple partnerships in biologicals aimed at accelerating the launch of novel technologies and boosting crops’ nutrient use efficiency. The biologicals business saw continued growth momentum with outstanding performance in China, driven by ISABION®, a highly effective biostimulant, providing abiotic stress relief for rice, fruits, and vegetables.
ADAMA
ADAMA sales declined 16% to $2.1 billion in the first half of 2024.
In the first six months, sales in Europe, Africa and the Middle East were 11% lower. Latin America sales were 29% lower. North America sales were 5% lower, and sales in Asia Pacific (excluding China) were 19% lower. Sales in China were 15% lower largely due to soft demand for non-agricultural products.
During the first half of 2024, ADAMA successfully registered BAZAK® in India, a new solution helping farmers to control brown plant hoppers in rice thanks to the combination of two systemic molecules (Pymetrozine and Dinotefuran) with different modes of actions. In Europe, the company received a re-registration renewal for its active ingredients Folpet and Captan which supports the successful FOLPAN® 500 SC product, a contact fungicide that is used to protect against Septoria leaf blight (Septoria tritici) in cereals.
Syngenta Seeds
Seeds sales were $2.4 billion in the first half of 2024, down 4% year-on-year.
Field crops sales in North America grew 2%; sales in China grew 29%, while sales in Europe were flat. As the Latin America season begins, we are seeing a strong start to Brazil delivering 38% sales growth; Latin America South & North at 34% lower, largely due to corn stunt disease causing a feeble market in Argentina. Asia, Middle East & Africa sales decreased 33% due to ongoing trade restrictions. Sales of Vegetable Seeds increased by 8% and sales of Flowers were 3% higher.
North America seeds benefitted from both branded and licensed soybean market share growth while holding to flat corn market share despite reduced corn acres. China seeds continue GM commercialization advancement by conducting corn and soybean large-scale trials all while balancing year-on-year growth through the launch of 31 new commercial products across corn, rice, and other crops.
Europe saw its first corn and sunflower seed bags sold through a 100% online (end-to-end e-commerce) platform with personalized product recommendation supported by Cropwise® Seed Selector. And new corn hybrid launches reach the top tier of yield results in third party trials in Brazil.
Syngenta Vegetable Seeds experienced strong sales growth, led by double-digit growth in the Europe, Africa, Middle East region and the Asia Pacific region. Growth was driven by strategic pricing, the introduction of new products in Europe with value-added traits, such as resistances against Tomato Brown Rugose Fruit Virus (ToBRFV) and the New Delhi Virus (ToLCNDV), and a sharp focus in South East Asia, all while extending Syngenta’s leadership position in key crops in India, including tomato and cauliflower.
Syngenta Group China
Syngenta Group China achieved sales of $5.4 billion in the first half of 2024, 16% lower year-on-year.
The robust growth in branded formulations, seeds, and bio-fertilizers was counterbalanced by a substantial year-on-year price decline and a planned reduction in grain trading operations.
Sales of Seeds grew 28%. Sales of Branded Formulation were 2% higher. Sinofert sales were flat. Yangnong Chemical sales were 23% lower. Syngenta Group China reduced lower-margin grain trading activities and, as a consequence, grain trading business sales were 54% lower.
In the first six months in China, several new products, including TYMIRIUM® technology, were successfully launched. The advancement of the “Bio+” strategy in the crop nutrition business, marked by the launch of four new biofertilisers, led to a 30% increase in biofertilizer gross profit.
In Seeds, 31 new varieties were introduced, and the commercialization of GMO was expedited with an 85,000-hectare demonstration planting area. Additionally, MAP promoted its “product + service” model, thereby improving its profitability.
