Syngenta scythes into cost base
Crop science giant Syngenta, which has operations in Cambridge UK, is taking a scythe to global costs.
The company has not said whether the rationalisation will result in job cuts or if Cambridge would be affected.
Chief executive Mike Mack says: “Restructuring has always been a way of life at Syngenta and this represents the fifth cost savings program that we've announced.
“It’s dubbed Accelerating Operating Leverage, the value of this is going to be an additional five percentage points of EBITDA on the bottom line by 2018.
“The cost is $900m and it will deliver benefits of $1bn per year of annualised cost savings, which makes it relative to the preceding programs the best cost savings ratio of the programs that we've had so far.
“It's going to be targeted in three areas: the first is production, the second is in research and development and thirdly, perhaps most importantly, our customer-facing operations.
“And this is very timely now that we've finished the integration of crop protection and seeds where we had now with clarity a lot of opportunity to streamline those operations on the front line. And we've already appointed project management to this and the company is geared up to get underway.”
The company grew integrated sales six per cent during 2013 – below the eight per cent target set at the start of the year.
Emerging market growth continued at a double-digit rate and included Asia Pacific, Latin America, Eastern Europe and – increasingly – Africa.
Earnings per share was down 12 per cent in the year. “First we didn’t have the recurrence of the trade royalty income of 2012 and secondly we had higher seeds costs related in part to some weather events and that led to a write-down in the third quarter and that impacted the profitability.” said Mack.
“In addition, our crop protection business in Brazil was lower than we expected, driven in large part by the absence of a registration for a blockbuster new product that is coming to market soon, but that was a disappointment late in the year.”
Syngenta has now moved its EBITDA target corridor from 22-24 per cent to 24-26 per cent by 2018.
• PHOTOGRAPH SHOWS: Syngenta Chief executive, Mike Mack