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Syngenta: Half Year Results 2002 'Strong Earnings Growth And Cash Generation'

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    BASEL, Switzerland, Aug. 7 /PRNewswire-FirstCall/ --
 
     Financial Highlights (unaudited)
 
                              1st Half      1st Half
                                2002          2001         Actual          CER
                                 $m            $m             %             %
      Sales                     3902          4031          - 3           - 2
      EBITDA(1)                 1099          1059          + 4           + 6
      Profit before Tax(1)       751           716          + 5           + 8
      Net Income(1)              448           400          +12
      Earnings per Share(1)
       (diluted)               $4.41         $3.95          +12
      Net Income (statutory)     328           377
      Earnings per Share
       (statutory & diluted)   $3.23         $3.72
 
     Growth rates in the following narrative are at constant exchange
        rates (CER).
     -- Crop Protection sales down 2 percent; Seeds sales down 1 percent
     -- EBITDA(1) margin up to 28.2 percent (2001: 26.3 percent)
     -- Synergies ahead of plan; program target increased to $625 million
     -- Earnings(1) up 12 percent
     -- Free cash flow $398 million; gearing reduced to 40 percent
 
     Michael Pragnell, Chief Executive Officer, said:
     "These results represent a strong performance against a background of
 continuing tough market conditions. Sustained cost and working capital
 reductions have underpinned earnings growth; results have also benefited from
 early action to reduce exposure in Latin America. New product launches have
 been very successful and together with innovative marketing programs are
 contributing to an improving product mix."
 
     (1) Excluding special items of $157 million (2001: $35 million) being a
         net charge in respect of merger and restructuring costs. Diluted EPS
         calculated on 101,581,456 shares.
 
     Highlights for 1st Half 2002
      Growth rates in the following narrative are at constant exchange rates
 (CER).
 
     Sales during the first half of 2002 were two percent lower as agricultural
 markets showed no improvement and distribution channel inventories remain high
 in a number of major territories. In aggregate, prices were down one percent.
     EBITDA improved by six percent and margins increased by two percent due to
 reduced cost and improved product mix through range rationalization. Larger
 than projected cost reductions were achieved in all functions; savings in
 General and Administrative were offset by project expenditure to improve
 future organization effectiveness and efficiency.
     Earnings per share excluding special items were up 12 percent helped by
 lower financial expenses and a lower tax rate.
     Currency: sales were reduced by one percent primarily due to Euro weakness
 during most of the first half; a stronger Swiss Franc combined with Euro
 weakness reduced EBITDA by two percent.
     Latin America: Early implementation in late 2000 of risk control measures
 in Argentina and Brazil mitigated the worst effects of the economic crises in
 both countries. The early action in Argentina has established a smaller but
 robust business, selling only on secure terms, which is well positioned to
 capitalize on future recovery. The drive to reduce in-channel inventories and
 control receivables in Brazil has resulted in reduced sales and will continue
 to constrain sales in the important second half for this market particularly
 given current economic volatility.
     Crop Protection: Active management of the product portfolio has continued
 to be a key focus. The launches and roll-out of the major new products
 ACANTO(R), ACTARA(R)/CRUISER(R) and CALLISTO(R) have been very successful with
 innovative marketing programs. Sales growth of new products contributed
 $155 million during the first half of the year. During the same period, the
 phase-out program resulted in a reduction in sales of $96 million; a further
 four Active Ingredients (AIs) were phased-out, bringing the total of
 proprietary AIs to 99 with plans well advanced to achieve the portfolio target
 of 76. Ten AIs have already been approved in the European Union
 re-registration process and a program is in place for the balance.
     The combination of new launches and product rationalization is leading to
 a higher quality portfolio and improved working capital ratios. Gross profit
 has increased from 51.1 percent to 52.7 percent with around one third
 resulting from improvements in product mix and the balance from reductions in
 cost of goods. This was achieved against an aggregate price decline of one
 percent.
     Distribution channel inventories for the industry in general are high,
 including in the major markets of the USA, Brazil, France and Japan. Syngenta
 has made progress in reducing in-channel stocks and aligning sales more
 closely to consumption whilst responding to the need of distributors to
 improve efficiency.
     Seeds: Sales declined by one percent; continued growth in vegetables and
 an encouraging performance from flowers were more than offset by a decline in
 field crop sales, largely in the USA. The business remains focused on raising
 profitability through an improved product mix, reduced product costs and
 continued expense containment.
     Synergies: Synergies totaling $105 million were realized in the first half
 of the year, with delivery from merger to the end of 2002 now expected to
 reach $340 million.
     Cash Flow and Balance Sheet: Free cash flow of $398 million (2001 first
 half: $278 million, including the receipt of $191 million from mandated
 divestments) was achieved through tight control of working capital and the
 impact of accelerated collection of receivables. Trade working capital as a
 percentage of sales improved to 51 percent (2001 first half: 54 percent) while
 fixed capital expenditure was contained significantly below depreciation.
     At the period end, net debt was $1.8 billion (2001 first half:
 $2.4 billion) representing a gearing ratio of 40 percent (2001 first half:
 54 percent).
 
     Outlook
     Michael Pragnell, Chief Executive Officer, said:
 
     "We expect the sales trend in the second half to be broadly in line with
 the first half result. Recent currency movements are likely to constrain the
 full year EBITDA margin improvement to around one percent.
     "We remain committed to steadily improving our performance ratios and have
 identified a further $100 million of cost savings; this increases the total
 program to $625 million, to be completed in 2005. Achievement of our 25
 percent EBITDA target is likely to be delayed until we see some recovery in
 agricultural markets.
     "As we build a strong organization for the future, my confidence in our
 innovative skills in marketing and technology remains high and these are
 reinforcing our strong competitive position."
 
     Syngenta is a world-leading agribusiness. The company ranks first in crop
 protection, and third in the high-value commercial seeds market. Sales in 2001
 were approximately US $6.3 billion. Syngenta employs more than 20,000 people
 in over 50 countries. The company is committed to sustainable agriculture
 through innovative Research and Technology. Syngenta is listed on the Swiss
 stock exchange and in London, New York and Stockholm. Further information is
 available at www.syngenta.com.
 
     Media Enquiries:       Lori Captain (USA)              +1 (302) 425 2121
 
     Analyst/Investor
      Enquiries:            Rhonda Chiger (USA)             +1 (917) 322 2569
 
     Crop Protection Sales
     Except where stated, all narrative in this section refers to the half
 year. Product line variances take into account minor reclassifications made in
 2002. Growth rates are at constant exchange rates (CER).
 
                                    Half Year                     Growth
     Product line               2002          2001         Actual         CER
                                 $m            $m            %             %
 
      Selective herbicides      1125          1224          - 8           - 7
      Non-selective herbicides   381           412          - 4           - 4
      Fungicides                 871           887          - 2           - 1
      Insecticides               480           507          - 3           - 2
      Professional products      304           270           +7            +8
      Others                      95            67          +20           +19
      Total                     3256          3367          - 3           - 2
 
                                    2nd Quarter                   Growth
                                2002          2001         Actual         CER
                                 $m            $m            %             %
                                 591           659          -10           -11
                                 230           245          - 4           - 5
                                 473           475          - 1           - 2
                                 286           295           --           - 1
                                 154           141          + 2            --
                                  50            34          +32           +24
                                1784          1849          - 3           - 5
 
     Selective Herbicides: major brands BICEP(R) MAGNUM, CALLISTO(R), DUAL(R)
 MAGNUM, FLEX(R), FUSILADE(R), TOPIK(R)
 
     In corn herbicides, CALLISTO(R) sales grew strongly to reach $88 million
 following its first full-season of marketing and more than offset a decline in
 DUAL(R)/BICEP(R) MAGNUM largely in the USA. In soybeans, sales of FLEX(R) and
 FUSILADE(R) were also lower with increased herbicide-tolerant crop plantings.
 In cereals, sales of the grass herbicide TOPIK(R) declined mainly in France
 and Canada. Lower sales of older brands and the phase-out of smaller products
 coupled with channel de-stocking significantly impacted overall sales of
 selective herbicides.
     Non-selective Herbicides: major brands GRAMOXONE(R), TOUCHDOWN(R)
 
     Continued strong growth of TOUCHDOWN(R) IQ(R) in the USA underpinned
 growth for the TOUCHDOWN(R) brand; this was partly offset by lower sales in
 Brazil and Argentina. GRAMOXONE(R) sales were lower as the benefits of new
 marketing programs in Australia did not fully offset delayed sales in China
 and channel de-stocking elsewhere in Asia and in Brazil.
     Fungicides: major brands ACANTO(R), AMISTAR(R), BRAVO(R), RIDOMIL GOLD(R),
 SCORE(R), TILT(R), UNIX(R)
 
     First full-season launches of the new strobilurin, ACANTO(R), in Europe
 resulted in sales of $26 million. Sales of AMISTAR(R), the largest product in
 the portfolio, were four percent lower; growth in North America and Japan was
 insufficient to offset declines in Western Europe, particularly France, due to
 increased competition. Sales of SCORE(R) continued to grow in Europe for fruit
 and vegetables; sales of RIDOMIL(R), BRAVO(R) and TILT(R) were lower.
 Phase-out of older products more than offset underlying sales growth in
 fungicides.
 
     Insecticides: major brands ACTARA(R), FORCE(R), KARATE(R), PROCLAIM(R),
 VERTIMEC(R)
     ACTARA(R) achieved sales of $48 million, with strong growth in the USA,
 Japan and India following launch last year. Sales of KARATE(R) sustained good
 growth driven by the launch of KARATE(R) ZEON(R) in Germany and increased
 sales in Asia, and more than offset a decline in the USA. VERTIMEC(R) sales
 were reduced by increased competition in the acaricides market. Phase-out of
 older products, notably in Asia, more than offset underlying growth in
 insecticides.
     Professional Products: major brands CRUISER(R), DIVIDEND(R), HERITAGE(R),
 ICON(R), MAXIM(R)
     Seed Treatment sales sustained very strong growth with sales of CRUISER(R)
 reaching $31 million, driven by strong demand in canola in North America and
 new launches in Europe and Africa. Growth of MAXIM(R) continued in the USA.
 Sales of Turf and Ornamentals were slightly higher with growth largely offset
 by product phase-outs. Public Health sales were down mainly due to reduced
 tenders for ICON(R) in Asia.
 
 
                                    Half Year                     Growth
     Regional                   2002          2001         Actual         CER
                                 $m            $m            %             %
 
     Europe, Africa and
      Middle East               1218          1211           +1            +2
     NAFTA                      1378          1433          - 4           - 4
     Latin America               210           235          -11           -10
     Asia Pacific                450           488          - 8           - 5
     Total                      3256          3367          - 3           - 2
 
                                    2nd Quarter                   Growth
                                2002          2001         Actual         CER
                                 $m            $m            %             %
                                 609           583           +4            +1
                                 831           882          - 6           - 6
                                 114           140          -19           -18
                                 230           244          - 5           - 7
                                1784          1849          - 3           - 5
 
     Sales in Europe, Africa and the Middle East were up due to new product
 introductions throughout the region, a modest market recovery in the UK, and
 strong performances in Germany and Eastern Europe. These factors more than
 offset a weak performance in France where a contracting market, increased
 competition in fungicides and the impact of a heavy phase-out program all
 adversely affected results.
     In NAFTA sales were down due to a number of factors in the USA; channel
 de-stocking, a competitive corn market and product phase-outs more than offset
 the increase in sales from new products. Sales in Canada increased slightly,
 with a strong performance from new product introductions offsetting the
 effects of drought during the second quarter. Sales in Mexico continued to
 grow strongly following new product introductions.
     With the continued risk reduction program, lower sales in Brazil (as
 highlighted on page two) resulted in an overall decline in sales in Latin
 America. Sales on secure terms in Argentina were up compared to last year.
     In Asia Pacific sales were down due to product phase-outs and re-phased
 sales following changes in distribution arrangements particularly in Japan,
 Korea and China. These effects more than offset growth from new product
 introductions and higher sales in Australia.
 
     Seeds Sales
     Except where stated, all narrative in this section refers to the half
 year. Growth rates are at constant exchange rates (CER)
 
                                    Half Year                     Growth
     Product line               2002          2001         Actual         CER
                                 $m            $m            %             %
 
     Field Crops                381           407          - 7           - 5
     Vegetables and Flowers     265           257           +3            +4
     Total                      646           664          - 3           - 1
 
                                    2nd Quarter                   Growth
                                2002          2001         Actual         CER
                                 $m            $m            %             %
                                141           146          - 4           - 4
                                133           131           +1            --
                                274           277          - 1           - 2
 
      Field Crops: major brands NK(R) corn, NK(R) oilseeds, HILLESHOG(R) sugar
 beet
     Sales of NK(R) corn declined; intense competition in the US market
 primarily due to shifts in technology and lower sales in Brazil more than
 offset increases in Europe and Asia. Oilseed sales also declined; soybean
 sales were lower while sunflowers grew strongly in Eastern Europe. Sales of
 HILLESHOG(R) sugar beet grew in a flat European market.
 
     Sales of GM product accounted for 17 percent of total Seeds sales.
     Vegetables and Flowers: major brands S&G(R) vegetables, ROGERS(R)
 vegetables, S&G(R) flowers
     Sales of S&G(R) vegetables continued to grow with particularly strong
 results from peppers, tomatoes and melons in Europe; growth was offset by
 reduced sales in Korea.
     Sales of S&G(R) flowers increased in both Europe and the USA.
 
 
                                    Half Year                     Growth
     Regional                   2002          2001         Actual         CER
                                 $m            $m            %             %
 
     Europe, Africa and Middle
      East                       316           299           +6            +8
     NAFTA                       270           292          - 8           - 8
     Latin America                33            43          -23           -23
     Asia Pacific                 27            30          - 9           - 6
     Total                       646           664          - 3           - 1
 
                                    2nd Quarter                   Growth
                                2002          2001         Actual         CER
                                 $m            $m            %             %
                                 119           106          +13           +11
                                 113           123          - 9           - 9
                                  27            31          -14           -13
                                  15            17          -10           - 9
                                 274           277          - 1           - 2
 
     Sales in Europe, Africa and the Middle East increased due to strong
 performance in vegetables, flowers, corn and sunflowers.
     In NAFTA declines in corn and soybean sales more than offset growth in
 vegetables and flowers.
     The sales decline in Latin America reflects the strategy of risk reduction
 highlighted on page two of this report.
     In Asia Pacific, increased sales of field crops, particularly in India,
 were more than offset by a decline in vegetable sales in South Korea and
 Japan.
 
     Synergy and Cost Reduction Programs
     By the end of 2002, half way through the original synergy program, cost
 savings of some $340 million are expected to have been delivered. This
 represents two thirds of the $525 million target.
     Synergy delivery in the first half of 2002 was $105 million. Some
 $50 million has been realized in Cost of Goods; $35 million from Selling,
 General and Administrative; and $20 million from Research and Development.
 Since merger, the total number of employees has been reduced by 2,150.
     A further $100 million of cost savings have been identified with
 $50 million targeted for delivery in both 2004 and 2005. There will be an
 additional cash cost of $100 million to deliver these savings.
 
     Currency
     Syngenta is subject to a material currency exposure which arises from two
 main factors: 29 percent of its cost base is in Swiss franc and sterling
 whilst some 19 percent of sales are made in emerging markets leading to an
 exposure to more volatile currencies.
     Most Euro-denominated sales occur in the first half while costs are spread
 more evenly throughout the year; results are therefore affected by the timing
 of currency changes.
     Compared with the same period in 2001, the first half of 2002 showed, on
 average, a combination of a slightly weaker Euro and a stronger Swiss franc,
 which resulted in a negative impact of one percent and two percent
 respectively on sales and EBITDA.
     The strengthening of the European currencies observed at mid-year will
 adversely affect EBITDA, although hedges in place are expected to limit the
 second half currency impact somewhat.
 
     Borrowings and Interest
     Net debt was $1.8 billion at the end of June (2001 first half:
 $2.4 billion) with gearing standing at 40 percent (2001 first half:
 54 percent). The gearing ratio benefited from weakness in the dollar at the
 end of the period.
     Free cash flow of $398 million, after a $120 million intellectual property
 payment to Bayer, reflects balance sheet management initiatives commenced in
 2001. Last year's first half free cash flow of $278 million included
 $191 million from mandated divestments.
     Net financial expense benefited from lower interest rates and an improved
 financing structure.
     Cash flow in the second half of 2001 and the first half of 2002 benefited
 from working capital initiatives commenced during that period; 2002 second
 half cash flow is expected to be negative. On the basis of current exchange
 rates the gearing ratio at the end of 2002 is expected to be around 45 percent
 (December 2001: 54 percent).
 
     Taxation
     Progress has been made through tax restructuring to achieve a further
 reduction in the gross tax rate to 40 percent (December 2001: 42 percent).
 
     Dividends
     A 2001 dividend of CHF0.80 was paid on 26 April 2002. Dividends are
 expected to be paid annually following shareholder approval at the AGM. The
 next AGM will be held on 29 April 2003.
 
     Auditors
     At the AGM on 23 April 2002, Ernst & Young were appointed as Group
 Auditors for 2002.
 
     Unaudited Segmental Results(1)
     Total Syngenta                 1st Half 2002      1st Half 2001       CER
                                         $m                 $m              %
 
     Sales                              3902               4031            -2
     Gross profit                       2055               2064            +1
      Marketing and distribution        (549)              (578)           +5
      Research and development          (336)              (358)           +6
      General and administrative        (323)              (310)           -4
     Operating income                    847                818            +7
     EBITDA                             1099               1059            +6
     EBITDA (%)                         28.2               26.3
 
 
     Crop Protection
                                    1st Half 2002      1st Half 2001       CER
                                         $m                 $m              %
     Sales                              3256               3367            -2
     Gross profit                       1716               1719            +1
      Marketing and distribution        (433)              (463)           +6
      Research and development          (206)              (229)          +10
      General and administrative        (277)              (260)           -7
     Operating income                    800                767            +7
     EBITDA                             1028                986            +6
     EBITDA (%)                         31.6               29.3
 
     Seeds
                                    1st Half 2002      1st Half 2001       CER
                                         $m                 $m              %
     Sales                               646                664            -1
     Gross profit                        339                345            --
      Marketing and distribution        (116)              (115)           -2
      Research and development           (57)               (57)           -1
      General and administrative         (37)               (41)          +11
     Operating income                    129                132            +1
     EBITDA                              148                149            +2
     EBITDA (%)                         22.9               22.4
 
 
     New Technology
                                    1st Half 2002      1st Half 2001       CER
                                         $m                 $m              %
     Sales                                --                 --            --
     Gross profit                         --                 --            --
      Marketing and distribution          --                 --            --
      Research and development           (73)               (72)           -2
      General and administrative          (9)                (9)          +14
     Operating income                    (82)               (81)           -1
     EBITDA                              (77)               (76)           -2
     EBITDA (%)                          n/a                n/a
 
     (1) Excluding special items.
 
     Unaudited Interim Condensed Consolidated Financial Statements
     The following unaudited interim condensed consolidated financial
 statements and notes thereto have been prepared on a statutory accounting
 basis in accordance with International Accounting Standards (IAS). A
 reconciliation to US GAAP has been prepared for US investors.
 
       Unaudited Interim Condensed Consolidated Income Statement
 
                                      Including Special Items     Special Items
     For the six months to 30 June      1st Half         1st Half    1st Half
                                         2002$m           2001$m      2002$m
     Sales                                3902             4031          --
     Cost of goods sold                  (1847)           (1967)         --
     Gross profit                         2055             2064          --
     Marketing and distribution           (549)            (578)         --
     Research and development             (336)            (358)         --
     General and administrative           (323)            (310)         --
     Merger and restructuring costs,
      net of divestment gains             (157)             (35)       (157)
     Operating income                      690              783        (157)
     Income from associates                 (3)              --          --
     Financial expense, net                (93)            (102)         --
     Income before taxes and
      minority interests                   594              681        (157)
     Income tax expense                   (264)            (298)         37
     Income before minority interests      330              383        (120)
     Minority interests                     (2)              (6)         --
     Net income                            328              377        (120)
     Earnings per share(2)
      -  basic                           $3.23            $3.72      $(1.19)
      -  diluted                         $3.23            $3.72      $(1.18)
     EBITDA(3)                             989             1024        (110)
 
                Special Items                                    Excluding
                                                               Special Items
                  1st Half      1st Half       1st Half       +ve/-ve Movement
                   2001$m        2002$m         2001$m             CER(1) %
                      --          3902           4031                    -2
                      --         (1847)         (1967)                   +6
                      --          2055           2064                    +1
                      --          (549)          (578)                   +5
                      --          (336)          (358)                   +6
                      --          (323)          (310)                   -4
                     (35)           --             --                   n/a
                     (35)          847            818                    +7
                      --            (3)            --                   n/a
                      --           (93)          (102)                   +4
                     (35)          751            716                    +8
                      12          (301)          (310)                  n/a
                     (23)          450            406                   n/a
                      --            (2)            (6)                  n/a
                     (23)          448            400                   n/a
                  $(0.23)       $(0.23)         $4.42
                   $4.41         $3.95          $3.95
                     (35)         1099           1059                    +6
 
     (1) Growth rates are at constant exchange rates (CER).
     (2) The weighted average number of ordinary shares in issue used to
         calculate the earnings per share were as follows: for 2002 basic EPS,
         101.4 million; 2002 diluted EPS, 101.6 million; 2001 basic and diluted
         EPS, 101.3 million.
     (3) EBITDA is defined as earnings before interest, tax, minority
         interests, depreciation, amortization and impairment. Information
         concerning EBITDA has been included as it is used by investors as one
         measure of an issuer's ability to service or incur indebtedness.
         EBITDA is not a measure of cash liquidity or financial performance
         under generally accepted accounting principles and Syngenta's EBITDA
         measures may not be comparable to other similarly titled measures of
         other companies. EBITDA should not be construed as an alternative to
         operating income or cash flow as determined in accordance with
         generally accepted accounting principles.
 
 
 
     Unaudited Interim Condensed Consolidated Balance Sheet
 
                                              30        30       31
                                             June      June    December
                                             2002      2001     2001
                                              $m        $m       $m
 
     Assets
      Current assets
       Cash and cash equivalents              260      595       288
       Trade accounts receivable             2589     2791      1860
       Other accounts receivable              292      277       242
       Other current assets                   494      139       214
       Inventories                           1631     1584      1716
       Total current assets                  5266     5386      4320
     Non-current assets
       Property, plant and equipment         2352     2474      2348
       Intangible assets                     2943     2831      3004
       Investments in associates
        and joint ventures                     97      110       103
       Deferred tax assets                    714      585       666
       Other financial assets                 271      259       268
       Total non-current assets              6377     6259      6389
     Total assets                           11643    11645     10709
 
     Liabilities and Equity
 
      Current liabilities
       Trade accounts payable               (1079)    (889)     (687)
       Current financial debts              (1034)   (2840)    (1420)
       Income tax and other
        taxes payable                        (312)    (382)     (220)
       Other current liabilities             (899)    (793)     (882)
       Provisions                            (239)    (249)     (231)
       Total current liabilities            (3563)   (5153)    (3440)
 
     Non-current liabilities
       Non-current financial debts          (1238)    (107)    (1116)
       Deferred tax liabilities             (1283)   (1237)    (1159)
       Provisions                            (894)    (704)     (835)
       Total non-current liabilities        (3415)   (2048)     3110
 
     Total liabilities                      (6978)   (7201)    (6550)
     Minority interests                       (78)     (99)      (73)
     Total equity                           (4587)   (4345)    (4086)
     Total liabilities and equity          (11643)  (11645)   (10709)
 
     In order to achieve consistent presentation of working capital balances
 across the Syngenta group and for all periods presented, reclassifications
 have been made to comparative 30 June 2001 figures for trade accounts
 receivable, other accounts receivable and trade accounts payable.  These
 reclassifications had no effect on the comparative consolidated net assets,
 net current assets, free cash flow or net debt figures presented.
 
     Unaudited Interim Condensed Consolidated Cash Flow Statement
 
     For the six months to 30 June                              2002     2001
 
                                                                 $m     $m(1)
     Operating Income                                            690      783
     Adjustment for non-cash items;
      Depreciation, amortization and impairment
      on Property, plant and equipment                           176      140
      Intangible assets                                          127      105
      Gain on disposal of fixed assets                           (27)     (71)
      Charges in respect of provisions                           188      192
     Cash (paid)/received in respect of;
     Interest paid (net)                                        (149)    (109)
     Taxation                                                   (148)    (181)
     Merger and restructuring costs                             (107)    (183)
     Other provisions                                            (53)     (35)
     Cash flow before working capital changes                    697      641
     Change in net current assets and other
      operating cash flows                                      (148)    (378)
     Cash flow from operating activities                         549      263
     Additions to property, plant and equipment                  (65)    (116)
     Proceeds from disposals of property, plant
      and equipment                                               34        6
     Purchase of intangibles, investments in associates
      and other financial assets                                (138)     (21)
     Proceeds from disposals of intangible and
      financial assets                                             3        3
     Proceeds from divested assets                                10      191
     Business acquisitions and divestments (net
     of liquidity acquired)                                        -        -
     Acquisition of minorities                                     -       (6)
     Cash flow from/(used for) investing activities             (156)      57
     Net change in Novartis interest-bearing debt                  -     (140)
     Increases in other third party interest-bearing debt       2317     1809
     Repayment of third party interest-bearing debt            (2692)   (2108)
     Cash flow from/(used for) financing activities             (375)    (439)
     Dividends paid to group shareholders                        (48)       -
     Dividends paid to minorities                                 (3)       -
     Net effect of currency translation on cash
      and cash equivalents                                         5      (42)
     Net change in cash and cash equivalents                     (28)    (161)
     Cash and cash equivalents at the beginning
      of the period                                              288      756
     Cash and cash equivalents at the end of the period          260      595
 
      (1) Comparative 2001 data has been aligned with the new format of the
 Consolidated Cash Flow Statement.
 
     Unaudited Interim Condensed Consolidated Statement of Changes in Equity
 
                                                                        Total
                                                                       equity
                                                                           $m
 
     31 December 2000                                                    4210
     Net income                                                           377
     Unrealized holding loss on available for sale financial assets        (4)
     Unrealized gains/(losses) on derivatives designated
      as cash flow hedges                                                 (13)
     Foreign currency translation adjustment                             (225)
     30 June 2001                                                        4345
 
     31 December 2001                                                    4086
     Net income                                                           328
     Unrealized holding loss on available for sale financial assets       (21)
     Income tax (charged)/credited to equity                               (4)
     Dividends paid to group shareholders                                 (48)
     Unrealized gains/(losses) on derivatives designated
      as cash flow hedges                                                  34
     Foreign currency translation adjustment                              212
     30 June 2002                                                        4587
 
     The issued share capital consists of 112,564,584 registered shares with a
 nominal value of CHF10 each. The additional paid-in capital is, to the extent
 of 20 percent of the share capital of $667 million, not available for
 distribution.
 
     Notes to the Unaudited Interim Condensed Consolidated Financial Statements
 
     Note 1: Basis of Preparation
     Nature of operations: Syngenta AG ("Syngenta") is a world leading crop
 protection and seeds business that is engaged in the discovery, development,
 manufacture and marketing of a range of agricultural products designed to
 improve crop yields and food quality.
     Basis of presentation and accounting policies: Syngenta's unaudited
 interim condensed consolidated financial statements for the six months ended
 30 June 2002 are prepared in accordance with the International Accounting
 Standards (IAS) adopted by the International Accounting Standards Board (IASB)
 and the Interpretations issued by the Standing Interpretations Committee of
 the IASB. Except for the changes described below in Note 2, our accounting
 policies are those set out in the 2001 Financial Report. The unaudited interim
 condensed consolidated financial statements have been prepared in accordance
 with our policies, which are applied consistently, and International
 Accounting Standard ("IAS") No.34 - "Interim Financial Reporting". These
 principles differ in certain significant respects from generally accepted
 accounting principles in the United States ("US GAAP"). Application of US GAAP
 would have affected shareholders' net income and equity for the six months
 ended 30 June 2002 and 2001 as detailed in Note 8 to the interim condensed
 consolidated financial statements.
     These interim financial statements should be read in conjunction with the
 consolidated financial statements for the year ended 31 December 2001, as they
 provide an update of previously reported information.
     The consolidated financial statements are presented in United States
 dollars ("$") as this is the major trading currency of the company.
     The preparation of interim financial statements requires management to
 make estimates and assumptions that affect the reported amounts of assets and
 liabilities and disclosure of contingent assets and liabilities at the date of
 the financial statements and the reported amounts of revenues and expenses
 during the reporting period. Actual results could differ from those estimated.
 
     Note 2: New Accounting Standards - IAS
     With effect from 1 January 2002 Syngenta has complied with IAS 19 (Revised
 2002) "Employee Benefits"; SIC-28 "Business Combinations - Date of Exchange
 and Fair Value of Equity Instruments"; SIC-30 "Reporting Currency -
 Translation from Measurement Currency to Presentation Currency"; SIC-32
 "Intangible Assets - Web Site Costs"; and SIC-33 "Consolidation and Equity
 Method - Potential Voting Rights and Allocations of Ownership Interests".
 These new standards and interpretations did not have a material impact on the
 interim condensed consolidated financial statements of Syngenta.
     The effect of new US GAAP accounting standards is described in Note 9
 below.
 
     Note 3: Changes in the Scope of Consolidation
     There were no significant acquisitions or divestments during the first six
 months of 2002 and 2001.
 
     Note 4a: Unaudited First Half Product Line and Regional Sales
 
 
                                             1st         1st      Ac-
                                            Half        Half    tual(1)  CER(1)
                                            2002        2001      (1)
     Syngenta                                 $m          $m       %        %
      Crop Protection                       3256        3367     - 3      - 2
      Seeds                                  646         664     - 3      - 1
      Total                                 3902        4031     - 3      - 2
 
     Crop Protection
     Product line
      Selective herbicides                  1125        1224     - 8      - 7
      Non-selective herbicides               381         412     - 4      - 4
      Fungicides                             871         887     - 2      - 1
      Insecticides                           480         507     - 3      - 2
      Professional products                  304         270     + 7      + 8
      Others                                  95          67    + 20     + 19
     Total                                  3256        3367     - 3      - 2
 
     Regional
      Europe, Africa and Middle East        1218        1211     + 1      + 2
      NAFTA                                 1378        1433     - 4      - 4
      Latin America                          210         235    - 11     - 10
      Asia Pacific                           450         488     - 8      - 5
      Total                                 3256        3367     - 3      - 2
 
     Seeds
     Product line
      Field Crops                            381         407     - 7      - 5
      Vegetables and Flowers                 265         257     + 3      + 4
      Total                                  646         664     - 3      - 1
 
     Regional
      Europe, Africa and Middle East         316         299     + 6      + 8
      NAFTA                                  270         292     - 8      - 8
      Latin America                           33          43    - 23     - 23
      Asia Pacific                            27          30     - 9      - 6
      Total                                  646         664     - 3      - 1
 
     (1) Product line variances take into account minor reclassifications made
 in 2002.
 
     Note 4b: Unaudited Second Quarter Product Line and Regional Sales
 
 
                                             2nd          2nd     Ac-
                                         Quarter      Quarter    tual    CER(1)
     Syngenta                               2002         2001      (1)
                                              $m           $m       %       %
      Crop Protection                       1784         1849     - 3     - 5
      Seeds                                  274          277     - 1     - 2
      Total                                 2058         2126     - 3     - 4
 
     Crop Protection
     Product line
      Selective herbicides                   591          659    - 10    - 11
      Non-selective herbicides               230          245     - 4     - 5
      Fungicides                             473          475     - 1     - 2
      Insecticides                           286          295       -     - 1
      Professional products                  154          141     + 2       -
      Others                                  50           34    + 32    + 24
      Total                                 1784         1849     - 3     - 5
 
     Regional
      Europe, Africa and Middle East         609          583     + 4     + 1
      NAFTA                                  831          882     - 6     - 6
      Latin America                          114          140    - 19    - 18
      Asia Pacific                           230          244     - 5     - 7
      Total                                 1784         1849     - 3     - 5
 
     Seeds
     Product line
      Field Crops                            141          146     - 4     - 4
      Vegetables and Flowers                 133          131     + 1       -
      Total                                  274          277     - 1     - 2
 
     Regional
      Europe, Africa and Middle East         119          106    + 13    + 11
      NAFTA                                  113          123     - 9     - 9
      Latin America                           27           31    - 14    - 13
      Asia Pacific                            15           17    - 10     - 9
      Total                                  274          277     - 1     - 2
 
     (1) Product line variances take into account minor reclassifications made
 in 2002.
 
     Note 5: Principal Currency Translation Rates
 
      As an international business selling in over 100 countries, with major
      manufacturing and R & D facilities in Switzerland, the UK and the USA,
      business performance is impacted by movements in currencies. The
      principal currencies and their exchange rates against the dollar, for the
      half year 2002 and 2001, used to prepare the financial statements
      contained in this interim report were as follows:
 
                               Average     Average    Period end    Period end
                              1st Half    1st Half      1st Half      1st Half
                                  2002         2001         2002          2001
 
     Swiss Franc. CHF             1.66         1.70         1.48         1.79
     Pound sterling.              0.70         0.69         0.65         0.71
     GBP
     Yen. JPY                   130.47       119.15       118.92       124.29
     Euro. EUR                    1.13         1.11         1.01         1.18
 
      The above average rates are an average of the monthly rates used to
      prepare the condensed consolidated income and cash flow statements. The
      period end rates were used for the preparation of the condensed
      consolidated balance sheet.
 
     Note 6: Impact of Special Items, net
 
 
                                                1st Half         1st Half
                                                  2002             2001
                                              $m       $m       $m       $m
     Income Statement charge
 
     Merger and integration costs                     (10)              (70)
 
     Restructuring costs
 
      Asset write-offs                       (47)              (10)
 
      Cash costs                            (102)              (26)
 
     Total                                           (149)              (36)
 
     Gains from mandated product disposals              2                71
 
     Total special items, net                        (157)              (35)
 
      During the first half of 2002 the post-tax impact of special items
      reduced basic earnings per share (EPS) by $1.19 to $3.23, and diluted EPS
      by $1.18 to $3.23. In 2001 basic and diluted EPS were reduced by $0.23 to
      $3.72.
 
     Note 7a: Net Debt Reconciliation
 
      The following table provides a reconciliation of movements in net debt
      during the period:
 
                                                        2002             2001
 
                                                          $m               $m
     Opening balance at 1 January                       2219             2429
 
     Acquisitions and disposals                            -                -
     Other non-cash items                                (22)             280
     Foreign exchange effect on debt                     (12)             (79)
     Sale of Treasury Stock                                -                -
     Dividends paid to group shareholders                 48                -
     Dividends paid to minorities                          3                -
     Free cash flow                                     (398)             (278)
     Closing balance as at 30 June                      1838              2352
 
     Constituents of closing balance;
     Cash and cash equivalents                          (260)             (595)
     Current financial debts                            1034              2840
     Non-current financial debts                       .1238               107
     Financing-related derivatives                      (174)                -
     Closing balance at 30 June                         1838              2352
 
     Note 7b: Free Cash Flow
 
      Free cash flow comprises cash flow after operating activities, investing
      activities, taxes and operational financing activities, but prior to
      capital financing activities such as drawdown or repayment of debt,
      dividends paid to Syngenta Group shareholders, share buyback and other
      equity movements. Free cash flow is not a measure of financial
      performance under generally accepted accounting principles and Syngenta's
      free cash flow measure may not be comparable to similarly titled measures
      of other companies.
 
 
                                                           2002          2001
                                                             $m            $m
     Cash flow from operating activities                    549           263
     Cash flow used for investing activities               (156)           57
     Free cash flow, pre-foreign exchange effect            393           320
     Foreign exchange effect on cash and cash equivalents     5           (42)
     Free cash flow                                         398           278
 
      The free cash flow for the comparative period has been revised in
      accordance with the treatment in the 2001 full year audited Consolidated
      Financial Statements.
 
     Note 8: Reconciliation to US GAAP from the Interim Condensed Consolidated
     Financial Statements
 
      Syngenta's interim condensed consolidated financial statements have been
      prepared in accordance with IAS which, as applied by Syngenta, differs in
      certain significant respects from US GAAP. The effects of the
      application of US GAAP to net income and equity are set out in the tables
      below:
 
                                                                2002     2001
     Net income (for six months ended 30 June)
                                                                  $m       $m
     Net income under IAS                                        328      377
     US GAAP adjustments:
      Purchase accounting:
       Zeneca agrochemicals                                       25       23
       Other acquisitions                                        (47)     (45)
      Pension provisions (including post-retirement benefits)     (4)       -
      Stock based compensation                                     -        -
      Deferred taxes on unrealized profit in inventory           (25)     (12)
      Capitalized costs, less disposals and depreciation           -        7
      Deferred tax effect on US GAAP adjustments                   7        7
     Net income under US GAAP (note 9)                           284      357
     Weighted average number of ordinary shares
      in issue - basic                                         101.4    101.3
     Weighted average number of ordinary shares
      in issue - diluted                                       101.6    101.3
     Earnings per Share under US GAAP (basic
      and diluted) (note 9)                                    $2.80    $3.52
 
                                                                2002     2001
     Equity (as at 30 June)
                                                                  $m       $m
     Equity under IAS                                           4587     4345
     US GAAP adjustments:
      Purchase accounting:
       Zeneca agrochemicals                                     (485)    (222)
       Other acquisitions                                       1051     1194
      Pension provisions (including post-retirement benefits)     (6)      (5)
      Stock based compensation                                     -        -
      Deferred taxes on unrealized profit in inventory           (52)     (49)
      Capitalized costs, less disposals and depreciation          29       27
      Deferred tax effect on US GAAP adjustments                (243)    (356)
 
     Equity under US GAAP                                       4881     4934
 
      For the six months ended 30 June 2002, net income under IAS was $328
      million, compared to net income of $284 million under US GAAP. The main
      reasons for the difference were in the application and incidence of
      purchase accounting under IAS and US GAAP, which caused differences to
      arise on both the purchase accounting for Zeneca agrochemicals business,
      and on other acquisitions. These differences also reflect compliance for
      US GAAP purposes with effect from 1 January 2002 with the cessation of
      goodwill amortization under SFAS 142, 'Goodwill and Intangible Assets'.
      The implementation status of goodwill impairment testing under SFAS 142
      is described in Note 9 below.
 
      Differences arise between the IAS and US GAAP treatments of the purchase
      accounting for Zeneca agrochemicals business such as different levels of
      amortization associated with the different treatment of intangibles.
 
      The net difference in pre-tax income arising between the IAS and US GAAP
      treatments for other acquisitions was $47 million. This difference mainly
      arises because the Sandoz and Ciba-Geigy merger was accounted for as a
      uniting of interests under IAS. For US GAAP the merger was accounted for
      as a purchase, including recognition and subsequent amortization of
      purchased product rights.
 
      For a further description of the difference between IAS and US GAAP, see
      Note 33 of Syngenta's consolidated financial statements of 2001 included
      in Form 20-F as filed with the US Securities and Exchange Commission on
      10 April 2002.
 
     Note 9: New accounting standards - US GAAP
 
      Syngenta has complied with SFAS 141 'Business Combinations' in relation
      to all business combinations initiated after 1 July 2001, and has
      complied with SFAS 142 'Goodwill and Intangible Assets' with effect from
      1 January 2002.
 
      As a consequence of the adoption of SFAS 142 from 1 January 2002,
      goodwill amortization under US GAAP ceased from that date. Whereas SFAS
      142 changes the accounting measurement for goodwill from an amortization
      method to an impairment only method, under IAS, goodwill is still
      required to be amortized.
 
      As a result of the first step of a transitional impairment test under
      SFAS 142, Syngenta has identified certain reporting units in the Crop
      Protection and Seeds segments whose goodwill may be impaired. The total
      US GAAP carrying amount of goodwill allocated to these reporting units at
      1 January 1 2002 is approximately $150 million. The second step of the
      transitional test, which will determine the actual impairment amount, if
      any, will be completed by the end of 2002. Any potential impairment
      charge arising will be treated as the cumulative effect of an accounting
      change.  The amortization charge for goodwill under IAS was $27 million
      for the first six months of 2002. Any impairment charge would have no
      effect on Syngenta's liquidity or cash flow.
 
      Under IAS, the carrying amount of goodwill, the criteria for allocating
      goodwill to reporting units, and the process and method of measuring
      impairment are all different from their US GAAP equivalents. Because of
      these differences, any impairment charge recognized for US GAAP will not
      necessarily be recognized for IAS, and any impairment charge recognized
      for IAS will not necessarily be recognized for US GAAP. Also, in the
      event that impairment charges are recognized under both GAAPs with
      respect to the same assets, the amounts of those charges may be
      different.
 
      SFAS 142 does not require prior periods to be restated. The following
      table sets forth on a post-tax pro forma basis what Syngenta's
      consolidated US GAAP net income and earnings per share would have been if
      the provisions of SFAS 142 had been applied in the first six months of
      2001. This pro forma information does not include the results of the
      transitional impairment test discussed above.
 
 
                                                                  2002    2001
 
 
     Six months ended 30 June                                      $m      $m
 
     Reported net income under US GAAP (Note 8)                   284     357
     Goodwill amortization expense charged to reported net income   -      15
     Adjusted pro forma net income under US GAAP                  284     372
     Reported earnings per share under US GAAP
      (basic and diluted) (Note 8)                               2.80    3.52
     Goodwill amortization expense                                  -    0.15
     Adjusted pro forma earnings per share under US
      GAAP (basic and diluted)                                   2.80    3.67
 
     Syngenta has complied with SFAS 144 'Impairment or disposal of long-lived
     assets' with effect from 1 January 2002. Adoption of SFAS 144 has not had
     a material effect on the interim consolidated financial statements.
 
     Announcements and Meetings
 
 
 
     Third quarter trading statement                       25 October 2002
     Announcement of full year results 2002                20 February 2003
     AGM and first quarter trading statement 2003          29 April 2003
     Announcement of half year results                     30 July 2003
 
     Glossary and Trademarks
 
      All product or brand names included in this Interim Statement are
      trademarks of, or licensed to, a Syngenta group company. For simplicity,
      sales are reported under the lead brand names, shown below, whereas some
      compounds are sold under several brand names to address separate market
      niches.
 
 
     Selective Herbicides
      APIRO(R)           novel grass weed herbicide for rice
      BICEP(R) MAGNUM    broad spectrum pre-emergence herbicide for corn and
                         sorghum
      CALLISTO(R)        novel herbicide for flexible use on broad-leaved
                         weeds for corn
      DUAL(R) MAGNUM     grass weed killer for corn and soybeans
      ENVOKE(R)          novel low-dose herbicide for cotton and sugar cane
      FLEX(R)            broad spectrum broad-leaf weed herbicide for soybeans
      FUSILADE(R)        grass weed killer for broad-leaf crops
      TOPIK(R)           post-emergence grass weed killer for wheat
 
     Non-selective Herbicides
 
      GRAMOXONE(R)       rapid, non-systemic burn-down of vegetation
      TOUCHDOWN(R)       systemic total vegetation control
      TOUCHDOWN(R)IQ(TM) improved TOUCHDOWN(R)
 
     Fungicides
      ACANTO(R)          second-generation strobilurin with particular
                         advantages in early cereal applications
      AMISTAR(R)         broad spectrum strobilurin for use on multiple crops
      BRAVO(R)           broad spectrum fungicide for use on multiple crops
      RIDOMIL GOLD(R)    systemic fungicide for use in vines, potatoes
                         and vegetables
      SCORE(R)           triazole fungicide for use in vegetables, fruits and
                         rice
      TILT(R)            broad spectrum triazole for use in cereals, bananas
                         and peanuts
      UNIX(R)            cereal and vine fungicide with unique mode of
                         action
 
     Insecticides
      ACTARA(R)          second-generation neonicotinoid for controlling
                         foliar and soil pests in multiple crops
      FORCE(R)           unique pyrethroid controlling soil pests in corn
      KARATE(R)          foliar pyrethroid offering broad spectrum in
                         sect control
      PROCLAIM(R)        novel, low-dose insecticide for controlling
                         lepidoptera in vegetables and cotton
      VERTIMEC(R)        acaricide for use in fruits, vegetables and cotton
 
     Professional Products
      AVID(R)            acaricide for ornamentals
      BARRICADE(R)       pre-emergence crabgrass herbicide for turf
      CRUISER(R)         novel broad spectrum seed treatment - neoni
                         cotinoid insecticide
      DIVIDEND(R)        triazole seed treatment fungicide
      HERITAGE(R)        strobilurin turf fungicide
      ICON(R)            public health insecticide
      MAXIM(R)           broad spectrum seed treatment fungicide
 
      Field Crops
       NK(R)             global brand for corn, oilseeds and other field crops
       HILLESHOG(R)      global brand for sugar beet
 
     Vegetables and Flowers
      S&G(R) vegetables    leading brand in Europe, Africa and Asia
      S&G(R) flowers       global brand for seeds and young plants
      ROGERS(R) vegetables leading brand throughout the Americas
 
     Addresses for Correspondence
 
 
     Swiss Depositary        UK Registrar for   Depositary           Swedish
                             non-CREST          for ADRs             Securities
                             account holders                         Register
                                                                     Center
 
     SEGA Aktienregister AG  Lloyds TSB         The Bank of New York  VPC AB
     P.O.Box                 Registrars         Shareholder Relations Box 7822
     CH-4601 Olten           The Causeway       PO Box 11258          S-103 97
                             Worthing           Church Street Station Stockholm
                             West Sussex        New York, NY 10286    Sweden
                             BN99 6DA
 
 
     Tel: +41 (0)62          Tel: +44 (0)1903   Tel: +1 (212)     Tel: +46 (0)8
          205 3695                502541             815 6917          402 9000
 
      Registered Office
      Syngenta AG
      Schwarzwaldallee 215
      4058 Basel
      Switzerland
 
      Tel: +41 (0)61 323 1111
 
     Cautionary Statement Regarding Forward-Looking Statements
     This document contains forward-looking statements, which can be identified
 by terminology such as "expect", "would", "will", "potential", "plans",
 "prospects", "estimated", "aiming", "on track" and similar expressions. Such
 statements may be subject to risks and uncertainties that could cause the
 actual results to differ materially from these statements.  We refer you to
 Syngenta's publicly available filings with the US Securities and Exchange
 Commission for information about these and other risks and uncertainties.
 Syngenta assumes no obligation to update forward-looking statements to reflect
 actual results, changed assumptions or other factors. This document does not
 constitute, or form part of, any offer or invitation to sell or issue, or any
 solicitation of any offer, to purchase or subscribe for any ordinary shares in
 Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on
 in connection with, any contract therefore.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X28761517
 
 

SOURCE Syngenta International AG

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