Syngenta earnings to miss expectations

Reuters

* Q3 sales $2.9 bln, matching forecast

* Sees 2013 EPS close to last year's level

* Takes $170 mln writedown on U.S. corn seed inventory

* Shares open 2 percent lower

ZURICH, Oct 17 (Reuters) - Syngenta, the world'slargest agrochemicals company, said earnings for the year willcome in lower than it expected due to a writedown on seed stocksand emerging market currency swings will reduce a benefit fromexchange rates.

Earnings per share will no longer beat last year'sunderlying level, but instead come in close to that, which was$19.70 when excluding the effects of restructuring andimpairment, Basel-based Syngenta said on Thursday.

"We've produced more corn seeds than we plan to sell in 2014so we're being cautious and taking a provision," Chief FinancialOfficer John Ramsey told Reuters after the group reportedthird-quarter sales in line with expectations.

"But this is something that you'll see through the wholeindustry," he said. The group put its provision at $170 million.

Ramsey also said the group had expected currency rates toboost 2013 earnings by around $100 million, but now the companywas forecasting $50 million. Syngenta makes most of its sales inU.S. dollars.

"The pressure came from the emerging markets, which make up50 percent of our sales," Ramsey said. "We saw significantvolatility which settled down through the latter part ofSeptember."

Shares in Syngenta - which have sharply underperformedrivals so far this year - were down 2 percent in opening tradescompared to a 0.4 percent lower European chemicals sector.

"On the guidance, uncertainty over the full year impact ofexchange rates, progress in Latam, and the above inventorywrite-down will likely overhang the shares until early 2014," JPMorgan analysts wrote in a note.

Analysts at UBS said current consensus for underlying EPSwas at $22.80, and taking $19.50 as the new guidance wouldtranslate to a 14 percent downgrade.

Syngenta said that the planting season in Latin America hadstarted well, with sales up 17 percent there in the thirdquarter, driven by a 25 percent increase in Brazil.

In Latin America, which accounted for 26 percent of sales in2012, the planting season falls in the second half of the yearand is therefore important for the fourth quarter.

Syngenta trades at 16.1 times forward earnings at a premiumto DuPont's 13.8 times but at a discount to Monsanto's 20.0 times.

Earlier this month, Monsanto reported a deeper than expectedloss in its fourth quarter as sales in its key seeds andgenomics business slipped.

For 2013, Syngenta maintained a target for sales to surpasslast year's record of $14.2 billion and also a long-term goal toboost sales to $25 billion by 2020 as it banks on innovation anda more integrated business that supplies farmers with everythingfrom seeds and pesticides to fertilisers and support services.

Syngenta also reiterated its target for a margin on earningsbefore interest, tax, depreciation and amortisation (EBITDA) inthe range of 22 to 24 percent in 2015. The company had reportedan EBITDA margin of 23.2 percent at constant exchange rates in2012.

Sales at Syngenta rose 11 percent at constant currency ratesin the third-quarter to $2.9 billion compared with the averageanalyst forecast for $2.93 billion in a Reuters poll.

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