2013 Full Year Results

Transcription

1 2013 Full Year Results Basel: February 5, 2014

2 Safe harbor 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 U.S. 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 there for. 2

3 2013 Syngenta highlights Integrated sales up 6%*: CAGR 9% Emerging markets maintaining double digit growth* Commercial integration benefits across territories Lower royalty income, non-recurring Seeds costs Earnings per share** 12% lower Continued focus on cost and capital efficiency New EBITDA margin target: 24-26% by 2018 * At constant exchange rates ** Fully diluted basis, excluding restructuring and impairment 3

4 Integrated strategy: first three years Field force integration in all territories Global crop teams established Launch of integrated offers; scope increasing Sustained sales growth through period of implementation Operating cost efficiency; investments in growth and R&D 2020 sales target by crop raised from >$22bn to $25bn Foundation for profitable growth 4

5 On track for 2020 target Sales* $bn $25bn Vegetables Rice DFC Crop targets based on business projections and pipelines $14bn Corn Specialty Expanding seeds business: opportunities for further crop protection growth Cereals Sugar cane Global offers, new business models and collaborations Soybean * Excluding Lawn and Garden Source: Syngenta estimates 5

6 John Ramsay Chief Financial Officer

7 2013 financial highlights Sales $14.7bn, up 3% - integrated sales up 6%*; +4% volume, +2% price EBITDA $2.9bn, down 7%; margin 19.7% Net income $1.6bn, 11% lower EPS $19.30**, down 12% Dividend up 5% to CHF per share Free cash flow: $0.4bn CFROI above target at 13% * At constant exchange rates ** Fully diluted basis, excluding restructuring and impairment 7

8 Sales progression $m (54) (238) Volume 219 (256) 14, , Price Europe, North America Latin Asia Lawn Currency CRW America Pacific and royalty Garden Africa, Middle East Underlying growth

9 Operating income $m 3000 Seed production $175m Inventory write-down $170m 170* (385) Other $40m , % (256) 220 (150) , % (230) , % CRW 2012 Volume, royalty under- mix lying Price Underlying: excludes $256 million corn rootworm trait royalty income in 2012 Excluding restructuring and impairment * Including $10 million from previous program Savings COGS Cost Growth Cur- Other 2013 inflation invest- rency ments 9

10 Lawn and Garden: streamlining improves profitability $m % 22.2% Comparable sales growth +5%* - impact of divestments: $(108)m - impact of acquisitions: $29m Focus on elite genetics and high value chemistry Sales EBITDA EBITDA margin 2015 EBITDA margin target exceeded - on track for sustainable margin target delivery * At constant exchange rates 10

11 Earnings per share $m Operating income Net financial expense Taxation 2,265 (200) (323) 2,521 (147) (349) NFE: increased hedge volume, emerging market currency volatility Tax rate 15% 15% Tax rate unchanged Restructuring* (141) (182) Net income 1,644 1,847 Earnings per share $19.30 $22.03 Excluding restructuring and impairment, EPS on a fully diluted basis * Net of tax 11

12 Emerging market currency weakness 40 End quarter % change vs. dollar indexed to December 31, 2007 $164m -$343m $3m -$52m -$235m $53m 2013 currency impact on EBITDA: +$53m CHF Oil* EUR Emerging Markets** BRL Emerging market currency environment increasingly adverse 2014 full year currency headwind: ~$(50)m Year on year EBITDA currency impact * Price movement ** Sales-weighted basket of currencies 12

13 Free cash flow $m ,895 (1,021) Year end % of sales Inventories 38% 33% Accounts receivable 23% 22% Accounts payable 26% 24% 2000 (727) Trade working capital 35% 32% 1000 (99) (140) (523) EBITDA Working capital Capex* Restructuring and disposals Acquisitions Financing, tax, other Free cash flow * Investment in fixed tangible and intangible assets 13

14 Increasing cash return to shareholders Earnings per share* $ 20 CAGR +16% Dividend per share $ Proposed dividend increase: +5% in CHF, +11% in USD** 8 6 Commitment to ongoing increases 10 CAGR +4% 4 2 Net debt to equity: 24% Flexibility for acquisitions * Fully diluted basis, excluding restructuring and impairment ** 2013 converted at end January exchange rates All years restated to reflect pension accounting adjustments 0 Tactical share buybacks 14

15 John Atkin Chief Operating Officer

16 Global crop offers 2013 sales: $14bn* +6% Vegetables +4% Diverse field crops +11% Rice +16% Corn** 0% Soybean +11% Sugar cane +15% Cereals +12% Specialty crops -1% * Excluding Lawn and Garden ** +7% excluding $256 million corn rootworm trait royalty income in 2012 Growth at constant exchange rates Soybean: leading weed, insect control, seed care; fungicide transition; Brazil seeds platform Sugar cane: original concept delayed; launch of, ; expanding CP market Cereals: sales >$400m; new SDHIs; hybrid barley success in 8 countries Specialty: >40 crops; lower cotton acres in 2013; value chain relationships 16

17 2013 integrated business performance by region Europe, Africa and Middle East: sales +7% Good volume growth in high margin products Focused price action in CIS, SE Europe Italy and Iberia: share gain Latin America: sales +10% Price increases offset currency depreciation Strong growth in TOUCHDOWN: low margin Fungicides sales below target $bn % 34.3% $bn Sales Operating income Operating margin % 25.6% Sales growth at constant exchange rates. Operating income and margin exclude restructuring and impairment. 17

18 Latin America: positioned for outperformance Sales $bn CAGR +19% CAGR +10% History of share gain 2013 growth below market: Fungicides transition, risk management registration in Brazil expected Q New sugar cane model developing Leading corn traits, new soybean seed platform established in Brazil Seeds Crop protection Growth at constant exchange rates Targeting double digit annual growth through

19 Iberia: consistent share gain Crop protection market share % Sales CAGR +2% Market CAGR 0% Seeds market share % Sales CAGR +4% Market CAGR 0% Sales CAGR at constant exchange rates Source: Syngenta Incentives shifted from volume to market share Sales force capability: distributor/ grower facing, campaign expert Vegetables: demand creation through entire value chain - Integrated Crop Management Cereals: focus on selective herbicides and fungicides - platform for launch 19

20 CIS and South East Europe: customer and crop focus Sales $bn CAGR +23% F2F approach for agro-holdings and large farms Technology adaptation directly on the farm Full IMI offer in sunflower CAGR +19% Seeds Crop protection Early plant solution for corn Breakthrough innovation: - Gro N Tec vegetable crop stress management programs - offer to address grower pain points Growth at constant exchange rates 20

21 Crop protection sales up 8 percent Sales $bn CAGR +6% Selective herbicides Non-selective herbicides Fungicides Selective herbicides +5%: corn and cereal herbicides Europe, USA Non-selective herbicides +26%: TOUCHDOWN growth led by Brazil Fungicides +1%: SEGURIS in EAME, AMISTAR technology adoption in Asia; lower sales in Brazil 2 Insecticides Insecticides +7%: Brazil pest pressure drives DURIVO demand Growth at constant exchange rates Excludes Other (2013: $152 million) Seed care Seed care +12%: VIBRANCE successful launch North America; CRUISER expansion Brazil, China 21

22 Crop protection: new products $m Sales up 85% : up >60% in Brazil, almost tripled in USA : successful launch in Germany : new launches in North America, Australasia, Central Europe; sales >$120m Combined peak sales potential: >$850m Growth at constant exchange rates 22

23 Crop protection potential and pipeline: key launches Launch year 2014 / Solatenol Peak sales >$500m Peak sales potential: >$2bn : step change in control of soybean rust / cyantraniliprole >$400m : early season insect control 2015 >$200m : breakthrough biological soybean cyst nematode control bicyclopyrone 2016 >$250m Bicyclopyrone: expanding corn herbicide leadership oxathiapiprolin 2018 New fungicide >$100m >$300m Oxathiapiprolin: fungicide tailored for Specialty crop use New fungicide: fourth broad spectrum SDHI 23

24 Davor Pisk Chief Operating Officer

25 Global crop offers 2013 sales: $14bn* +6% Vegetables +4% Diverse field crops +11% Rice +16% Corn** 0% Soybean +11% Sugar cane +15% Cereals +12% Specialty crops -1% Corn: herbicide leadership; rapid emerging market seeds growth;, advances DFC: sunflower strength, new integrated solutions Vegetables: expanding opportunity for integration Rice: Devgen integration, protocols, * Excluding Lawn and Garden ** +7% excluding $256 million corn rootworm trait royalty income in 2012 Growth at constant exchange rates 25

26 2013 integrated business performance by region North America: sales -2% Lower trait royalty income: underlying growth +5% Strong selective herbicide demand: glyphosate resistance Seeds production costs/inventory write-down Asia Pacific: sales +11% Sales growth acceleration: double digit in emerging markets Rice protocols and corn seed expansion Strong performance in high margin ASEAN countries $bn % 27.9% Sales Operating income Operating margin % 27.9% Underlying: excludes $256 million corn rootworm trait royalty income in 2012 Sales growth at constant exchange rates. Operating income and margin exclude restructuring and impairment. $bn 26

27 Canada: cross-crop expansion Sales $m CAGR +9% Crop protection Seeds Leading herbicide offer, best-inclass seed care Strong CRM and in depth grower knowledge New entry into cereal and canola seeds; rotation opportunity Incremental value: 2020 Crop Seed value Seed care and crop protection Total Canola ~$50m ~$20m ~$70m Cereal growers purchasing Syngenta seed increase crop protection investment by >150% Cereals & pulse <$1m ~$35m ~$35m Growth at constant exchange rates 27

28 ASEAN: demand creation focus ASEAN 2013 sales Seeds Rice Vegetables Corn Seed care Insecticides * At constant exchange rates Herbicides Fungicides Sales growth 12%* CAGR Crop-driven strategy aligned with government agenda Rice focus: driving technology adoption Strong partnerships with local distributors Capability building programs Scaling up seeds creating new opportunities 28

29 Seeds sales up 1 percent; underlying sales up 9 percent Sales $bn 3 CAGR +10% Vegetables Corn: underlying sales growth in all regions; US supply challenge 2 DFC Soybean: North America lower offset by sharp increase in Brazil Corn and soybean DFC: leading sunflower hybrids in CIS, SE Europe; lower sugar beet acreage Vegetables: developed markets gradually returning to growth Underlying: excludes $256 million corn rootworm trait royalty income in 2012 Growth at constant exchange rates 29

30 US Corn traits: leading insect control offer : three year track record of superior broad lep control : vital innovation to beat corn rootworm resistance Insect Control Scale: - = no effect; + = some; ++ = good; +++ =very good; ++++ = excellent CRW root damage rating Check : commercial chassis Agrisure 3000GT Viptera 3111 Viptera campaigns ongoing Need for alignment of international regulatory processes Source: Syngenta 30

31 Brazil Soybean seeds: unique integrated approach Brazil Soybean seed sales $m Accelerate genetic gain CAGR +55% Leverage crop protection Fastest breeding cycle for genetic gain Leveraging leading crop protection portfolio Seeds at core of high-yielding offers including adjacencies New market approaches Integrate technologies New business model: switching licensing business to Syngenta brand Growth at constant exchange rates 31

32 High margin growth across sunflower portfolio Syngenta sunflower sales $m CAGR +20% Seeds: blockbuster hybrids, superior germplasm Strong presence in modernizing markets: CIS 200 Creating awareness of crop protection through GTM strategy Crop protection Seed care Seeds Developing integrated offers: IMI, broomrape 32

33 John Ramsay Chief Financial Officer

34 Continuing track record of operating expense leverage % of sales CER Expenses EBITDA Sales $bn Ongoing expense reduction : 70bps at CER Growth investments to drive top-line expansion Cumulative currency headwinds: >300bps adverse EBITDA margin impact As reported, excluding restructuring and impairment 34

35 Proven track record in delivering operating efficiencies Merger Extracting efficiency Shaping the future Integration Operational efficiency 1 Operational efficiency 2 Integrated efficiency program Target savings $625m $425m $290m $650m Delivered savings $650m $430m $300m $460m* Cash cost $1,000m $500m $550m $400m * To

36 Accelerating operational leverage $m EBITDA margin contribution EBITDA contribution Annual cash outflows Working capital release ~1% ~3% ~4% ~5% ~1,000 ~730 ~475 ~265* Program contributes ~$1bn to EBITDA margin by ~5% EBITDA margin improvement - efficiency gains based on long term sales plan Working capital release Cost: ~$900m Three core components * Includes existing program savings: 2015 $75 million 36

37 Accelerating operational leverage: three core components 2018 EBITDA % contribution and equivalent $m savings Production savings and efficiency gains ~5% ~$400m Seeds production and planning Expand global sourcing Syngenta Business Services Customer facing operations R&D efficiency ~$400m Working capital release: $600m ~$200m Drive efficiencies in integrated sales force Integrated demand and production management Pricing excellence in integrated offers Simplified management processes, crop focused synergies Integrated technology platform Lean operating principles 37

38 Outlook 2014 Integrated sales growth similar rate to 2013 despite lower crop prices Gross margin improvement: ~$240 million in Seeds cost reduction R&D expense at upper end of 9-10% of sales target Free cash flow before acquisitions ~$1.5 billion 2015 EBITDA margin: lower end of 22-24% range Longer term EBITDA margin target: 24-26% by 2018 CFROI: >12% ongoing 38

39 Mike Mack Chief Executive Officer

40 Strategy success factors Broad portfolio covering multiple crops Integrate Level 1: Leveraging combined field force Level 2: Integrated offers for yield, quality and convenience Outperform Innovate Level 3: Breakthrough innovation Superior sales force capability Needs-based grower segmentation Strong channel partnerships Leveraging Level 1 success to drive Levels 2 and 3 40

41 Profitability Growth Taking the strategy forward Field force integration Global crop teams Integrated offers Sustained sales growth 2020 crop sales target Transfer commercial success factors Accelerate most promising projects Share gain Distinctive offers at scale Breakthrough innovation 2020: $25bn crop sales Share gain Operating cost efficiency Investments in growth, R&D Gross margin expansion - production and supply savings - price realization Continued operating cost efficiency Sustained higher profitability EBITDA margin 24-26% by

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