Switzerland-based agricultural products company, Syngenta AG (SYT), reported improved year-over-year sales for first-quarter 2014. Sales in the reported quarter increased 2% year over year to $4.7 billion.
This was led by a rise in revenues across all the regions, especially Europe, Africa and the Middle East (:EAME), which witnessed a year-over-year sales hike of 8%. However, on a constant exchange rate basis, revenues were 5% higher than the year-ago quarter.
Revenues from North America declined 8.0% to $1.2 billion, due to extended cold weather conditions in the United States. Moreover, drought in California hampered the demand for insecticides and pesticides. The decline was partially offset by high demand for Vibrance seed care in Canada. Sales in EAME increased 8% to $2,095 million, led by an early start to the plantation season. The region recorded a rise in crop protection demand.
Sales in the Asia Pacific region grew 6% year over year to $558 million due to increased demand in Australasia on the back of favorable weather. Sales in emerging markets as well as developed markets improved. Business in Latin America improved 5% year over year to $595 million, largely due to increased sales of insecticides.
On a reported basis, crop protection sales went up 4% year over year to $3.2 billion as sales grew 13% in the EAME region. Seeds sales declined 2% year over year to $1.3 billion as sales in Latin America dropped 12%.
The strong start to the year reinforces the company’s belief on a strong year ahead. In 2014, Syngenta expects integrated sales to increase 6% year over year on a constant exchange rate basis.
Moreover, reduced seeds costs are likely to result in margin improvements. Free cash flow before acquisitions is expected to be roughly $1.5 billion while research and development expenditure are likely to be around 9–10% of total sales.
Syngenta currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include The Andersons, Inc. (ANDE), Gruma S.A.B. de CV (GMK) and CVR Partners, LP (UAN). All these stocks enjoy a Zacks Rank #2 (Buy).