Syngenta plans cost cuts as profit drops

Syngenta, is to step up cost-cutting to save $1 billion a year by 2018 after the world's largest maker of crop chemicals reported an 11 per cent fall in profit for last year.

The Swiss-based firm this morning said net profit came in at $1.64 billion.

"Our financial performance in 2013 did not meet expectations," chief executive Mike Mack said in a statement.

Syngenta warned in October that full-year earnings would be lower than it had expected due to a $170 million writedown on seed stocks and unfavourable currency rates.

“While this was mainly due to non-recurring costs in our seeds business, we are determined to intensify our focus on cost and capital efficiency while maintaining our ambitious growth objectives,” Mr Mack said.

The company forecast an improvement in its gross margins this year and said cost savings should offset investments in research and development.

Syngenta reported a margin on earnings before interest, tax, depreciation and amortisation (EBITDA) of 19.7 per cent, down from 21.9 per cent on the year. In 2015, it expects to come in at the lower end of its target for an EBITDA margin in the range of 22 to 24 per cent.

The cost savings should help it raise the margin to 24 to 26 per cent by 2018, it said.

Syngenta maintained a long-term goal to boost sales to $25 billion by 2020, as it banks on innovation and a more integrated business that supplies farmers with everything from seeds and pesticides to fertilisers and support services.

Reuters