2010 Full Year Results

Transcription

1 2010 Full Year Results Basel: February 9, 2011

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 therefor. 2

3 Mike Mack Chief Executive Officer

4 2010 industry highlights Stocks-to-use ratio* % Crop price index Jan 2002 = 100 Crop price volatility Government intervention: trade and financial market regulation Ongoing demand growth: emerging markets 01/02 03/04 05/06 07/08 09/10 * Ratio for combined corn, soybean, wheat and rice Source: WASDE Dec 2010 for STU, Bloomberg for prices, Syngenta analysis 4

5 Grower challenges Value Chain Cost, quality & availability Global Financial Instability Government & Regulators Commodities & credit Future Farmer Societal Pressures Environment & sustainability Safety & risk / food & energy security Channel Profit & influence Consumers Food: cost & quality 5

6 Syngenta: fully integrated offer on a global crop basis Innovate Integrate Future Farmer Outperform 6

7 Offer enabled by fundamental strengths Crop Protection market share % Seeds Sales $bn North America ~29% Latin America ~21% EAME ~20% Asia Pacific ~13.5% EBITDA margin %* * restated to reflect the pension accounting adjustment Source: Syngenta estimates 7 Crop Protection leadership Seeds advances in scale, profitability: proven technology Track record of tailoring solutions to local markets Leveraging ~$1bn R&D investment across businesses

8 Uniquely positioned to deliver value Sales by crop L&G Dedicated focus on agriculture Corn Specialty #1 or 2 in all regions Sugar cane Vegetables Cereals Soybean Sales by region Latin America #1 or 2 in all CP product lines DFC Proprietary GM traits and Seed Care: broad scope North America Combining chemicals and genetics Rice Combining commercial operations Europe, Africa, Middle East 8 Asia Pacific

9 John Ramsay Chief Financial Officer

10 Financial highlights Sales $11.6 bn, up 6% - up 4% CER; +9% volume, -5% price EBITDA up 3%* to $2.5bn Operating income** $1.97bn, unchanged EPS**: up 2% at $16.44 Free cash flow: $1.1bn Dividend up 17% to CHF 7.00 per share: return of share premium ROIC 23%, above target * At constant exchange rates ** Excluding restructuring & impairment: EPS fully diluted All 2009 data in this presentation reflects the pension accounting adjustment announced in July

11 Reported sales progression $m 199 (543) ,641 +4%* ,992 Volume 2009 * At constant exchange rates 11 Currency Crop Protection Seeds Price Intersegment sales/other 2010

12 Crop Protection performance Sales: $8.9 bn, up 3%* - volume +9%: growth across all regions - double digit Latin America, emerging Asia - price -6%: mainly North America EBITDA**: $2.2 bn (2009: $2.3 bn) - margin 24.7% (2009: 26.9%) - raw material benefit offset by lower prices - investments in emerging markets, R&D, systems * At constant exchange rates ** Excluding restructuring & impairment 12

13 Crop Protection: volumes rebound % variance vs. prior year* Favorable market sentiment, strong volume growth since Q2 Improving pricing trend, positive over 3 years Targeting price increases in competitive environment * At constant exchange rates 13

14 New products: strong global growth Sales $m : US, Brazil corn and CAGR +56% cotton launch: cereals France, Russia : Brazil corn, soybean; emerging Asia growth : expanded use on US vegetables Isopyrazam : successful initial launch UK barley Growth at constant exchange rates 14

15 Seeds performance: strong growth, margin increase Sales: $2.8 bn, up 8%* - volume +8%; +14% adjusted** - growth all product lines, regions - NAFTA Q4: strong cash advances EBITDA^: $357m (2009: $256m) - margin12.7% (2009: 10.0%) - product performance, triple stack penetration - gross margin progression, continued R&D investment - on track to meet targets * At constant exchange rates ** Adjusted for advanced corn & soybean sales in Q ^ Excluding restructuring & impairment 15

16 Operating income $m 489 (543) 17.9% 209 (97) (94) 40 1,966 1, % 17.9% Investments 2009 Volume Excluding restructuring & impairment 16 Price Raw Material Benefit Emerging Markets R&D, Systems Other Business Performance 2010

17 Currency movements: Swiss franc appreciation % change vs. dollar indexed to 31 December 2007 CHF Emerging Asia* EUR East Europe* GBP 2008 * Basket of currencies Marked strengthening of CHF vs. USD: +16% since end June 2010 Euro volatility Adverse net impact on cost base in H2 2010

18 Net income $m Operating income 1,970 1,966 Net financial expense (141) (122) Taxation (317) (325) Tax rate 17% 18% Restructuring* (136) (107) Net income 1,397 1,408 Earnings per share** $16.44 $16.15 * Net of tax ** Fully diluted basis, excluding restructuring & impairment 18

19 Record free cash flow $m 2,505 (73) (526) (69) (399) 1,438 (109) (200) 1,129 EBITDA Working Capital Capex* ReFinancing, structuring Tax, & disposals Other * Investment in fixed tangible and intangible assets 19 Cash Flow Acquisi- Additional tions Pension Contribution Free Cash Flow

20 Strong balance sheet: key ratios Average trade working capital 39% 42% Gearing 20% 28% ROIC 23% 24% 20 Target reduction in trade working capital exceeded Low gearing enables increased cash return ROIC consistently ahead of target

21 Integrated business model: efficiency gains $m 2011 Net annualized savings net of inflation Annual cash outflows 75 (100*) COGS SG&A (175*) (85) (40) Integrated commercial organization: $150m Integrated supply chain: $300m Global procurement: $200m 2011 income statement charge: ~$175m** * Excluding $130m in 2011, $100m in 2012 in respect of previous program ** Excluding $105m in 2011 in respect of previous program 21

22 Financial objectives EBITDA margin: continued strong profitability % by 2015 CFROI: maintain high return on investment - continuing to exceed 12% Cash return to shareholders: - prioritizing continuous dividend growth - tactical share buybacks 22

23 Mike Mack Chief Executive Officer

24 Three core objectives Unique offer in the field Integrate Global commercial teams fully combined end 2012 Integrated business model: cost savings Powerful R&D platform Innovate New markets and go-to-market models Partnerships and collaborations Average 0.5% pa market share growth Outperform New financial metrics Sustained cash generation, return to shareholders 24

25 Integrated R&D platform Customer Needs Technology Weed control Insect control Drought, Disease Nematode Yield Nitrogen Quality/ water-use control control potential efficiency output efficiency Breeding Native traits Biological solutions GM traits Seed Care Crop Protection Nutrients, water Machinery 25 Chemical solutions

26 New commercial organization Europe, Africa, Middle East territories: France, Iberia, Italy, North Europe, Central Europe, CIS, South East Europe, AME Latin America territories: Latam North, Latam South, Brazil, Brazil Cane John Atkin Regions: Europe, Africa, Middle East Latin America Crops: Cereals Soybean Sugar cane Specialty Products: Crop Protection 26

27 New commercial organization Davor Pisk Regions: North America Asia Pacific North America territories: Canada, USA Crops: Corn Diverse Field Crops Rice Vegetables Products: Seeds 27 Asia Pacific territories: Australasia, China, North East Asia, South Asia, ASEAN

28 John Atkin Chief Operating Officer

29 Latin America market opportunity: competitive advantage Market size Crop protection >$10bn Seeds Seed Care >$2.5bn >$0.5bn Combined market share: 21% Broad CP portfolio, leadership in soybean fungicides High quality germplasm, leveraging trait portfolio Breakthrough technology in sugar cane Strong financial risk management: direct sales to grower, barter models >$13bn Syngenta market share Source: Syngenta estimates 29

30 Transforming the business model in Brazil Unique value proposition Seeds benefiting from strengthening Market access sales resources leverage Value creation Commercial integration CP growth from integrated offers Market concept Time Consolidated management structure Integrated sales forces/customer interface Broad technology and agronomic knowledge Logistics and supply chain redesign Cultural change

31 Brazil soybean: integrated technology produced record yield 2010 yield record: 6,501 kg/ha* Through Syngenta s integrated 6,501 Kg/ha technologies of Seeds, Seed Care and Crop Protection we achieved the highest level of productivity. Now I know that it is possible to Leandro Ricci, Mamborê, Paranà, Brazil produce more than 4,000 kg/ha of soybean in Brazil, working with a truly integrated company Source: Brazilian Soybean Board (CESB) 2010 * Audited by Cotecna (Comitê Estratégico Soja Brasil / Aprova F

32 Brazil: proven growth potential Combined sales $m CAGR +19% Maintaining Crop Protection growth Seeds - broadening portfolio Crop Protection - managing patent expiries - market share gain Capturing value shift to Seeds - territory coverage - trait launches - market share gain 32

33 in sugarcane: anticipating customer needs Germplasm, crop protection: integrated R&D First integrated mechanized planting system Launch 2011: $300m in orders to 2015 Long term contracts with sugar mills Peak sales potential: >$500m 33

34 : focus on efficiency and sustainability Existing Operational complexity Less equipment, faster, more efficient Intense soil preparation Minimum tillage, better soil preservation High labor need in poor work conditions 34 Better work conditions, more qualified

35 EAME market opportunity: diverse crops, countries Market size Crop protection Seeds Seed Care Market leader in Eastern Europe; sunflower, seed care ~$12bn >$6bn Combined market share: 18% ~$1bn Cereals breeding expertise; exploiting chemical-genetic interaction Protocols to meet value chain requirements ~$19bn Syngenta market share Source: Syngenta estimates 35

36 Strategies for share gain Sales $m East Europe, Africa, Middle East: Range expansion Focus on agro-holdings Managing credit risk West Europe: Innovation: Isopyrazam, Sedaxane Resistance management East Europe, Africa, Middle East West Europe 36 Broad Seeds portfolio

37 Italy: integration enhances competitive position New structure, combined management Leverage #1 position in Crop Protection Launch high quality seeds 2010 corn: - Seeds share +2% - Source: Syngenta estimates 37 success

38 Ukraine: significant growth potential from integration Sales $m Market $650m in 2010; double by 2020 Complete product offer: CAGR +30% - full CP range, Dow AgroSciences distribution - Seeds: strong sunflower, corn, sugar beet Seeds Integrated trials with key agro-holdings Crop Protection Local risk management expertise receivables 98% collected - ~20% of net CP sales through barter Growth at constant exchange rates 38

39 European wheat: program for crop enhancement Leading seeds varieties bread-making quality, high yield high ethanol yield Seed Care for bigger roots, vigor, Sedaxane Improved water, nitrogen use efficiency Greener leaves and improved grain quality 39

40 : cornerstone of strong chemical portfolio Azoxystrobin sales volume tonnes Record sales: $1.2bn, led by emerging markets CAGR +21% 3rd party Significant growth across all crops Additional capacity on line 4000 Syngenta 3rd party supply agreements Increasing mixtures penetration Continuing above average gross margin 40

41 : new initiatives driving growth in emerging markets Sales $m CAGR +20% Other emerging markets New segments, higher penetration LATAM 2010 Asia Pacific sales >$120m Developed markets Product positioning, grower engagement Multiple crop uses: rice, fruits, vegetables Crop enhancement: proven yield advantage - rice, Vietnam: ~8% Untreated Source: Syngenta estimates 41 Treated - chilies, India: ~15%

42 Thiamethoxam: sales ramp up, multi-crop expansion Sales $m CAGR +20% Volume growth: ~17% Diverse, broad spectrum molecule Successful new multi-crop launches Mixtures enhancing portfolio 2010 sales by crop $m Crop enhancement opportunities Capacity expansion facilitating further growth 42

43 Crop Protection pipeline: multi-crop potential Target launch Late research Peak sales Early Late development development Sedaxane (SC fungicide) Bicyclopyrone (herbicide) >$1.7bn Cyantraniliprole insecticide SYN 192 fungicide (stress tolerance) Corn Soybean Cereals Vegetables Invinsa, a trademark of AgroFresh Inc., a subsidiary of DAS 43 Rice Sugar cane Specialty Others

44 Crop Protection pipeline: multi-crop potential Target launch Late research Peak sales Early Late development development post 2014 Herbicide Fungicide >$0.5bn Insecticide New crop enhancer Corn Soybean Cereals Vegetables Invinsa, a trademark of AgroFresh Inc., a subsidiary of DAS 44 Rice Sugar cane Specialty Others

45 Sustained value creation: Wheat CP technology breadth: Isopyrazam, New AIs: Sedaxane, SYN192; new broadleaf herbicide Leading Seeds varieties: Expanding seeds footprint, native traits launch Crop Enhancement: Integrated growing solutions: increasing farm profit Strong AI pipeline: all categories Hybrid wheat Biotic and abiotic traits Targeted chemical-genetic interaction Partnerships: CIMMYT, Dow >$1.0bn Current sales 45 ~$1.5bn Next five years ~$2.0bn

46 Davor Pisk Chief Operating Officer

47 Asia Pacific market opportunity Market size Crop Protection Seeds Seed Care Leading positions in crop protection and seeds Substitution of generic products >$11bn >$7bn ~$0.5bn Seed care adoption Spearheading rice productivity drive Combined market share: 9% Complete vegetables solutions Leadership in tropical corn germplasm ~$19bn Syngenta market share Source: Syngenta estimates 47

48 Asia Pacific: strategies for growth Sales $m Developed Asia Pacific: North East Asia: maximize profitability Australasia: expand portfolio, manage volatility Emerging Asia Pacific: Local manufacturing: cost efficiency Unique go-to-market strategies Rice expansion: Emerging 48 Developed - building hybrid seed strength

49 Rice: traditional cultivation Inefficient water use Labor intensive Low seed value Limited crop protection usage, largely generic Yields ~40% of potential Source: Syngenta estimates 49

50 : integrated rice program Program components: High quality seedlings seed care Mechanized transplanting Agronomic protocol 50

51 : trials show consistent yield advantage Indian field trials kg/ha Standard Tegra farmer practice yield increase Farmer value proposition: Average yield increase +30% Labor savings Simplicity Risk mitigation Source: Syngenta estimates 51

52 Vegetables: global growth Syngenta sales $m Second largest input market after corn CAGR +21% Value creation opportunity: Emerging - integrated technology, grower-focused protocols - combined field force CAGR +5% 52 Developed - downstream engagement with food chain

53 Integrating Vegetables offer in Asia Pacific China: 50% of global vegetables production Integration opportunity: #1 in CP, strong Seeds pipeline Sales force expansion: - direct access to 10,000 farmers - 7,000 branded retail stores Intensive vegetable cultivation: Shandong, China 53 Complete Vegetables solution: Seeds, CP, agronomic expertise

54 Integrated Vegetables offer in Europe Almeria, Spain 30 growers covering 75ha greenhouse Seeds variety, crop protection, biologicals Integrated protocol for minimum residues Crop monitoring and advice Seeds sales tripled: share of grower spend on inputs +20% Source: Syngenta estimates 54

55 North America market opportunity Market size Crop Protection Seeds Seed Care CP, Seeds share gain Resistance management: CP and traits >$8bn ~$11bn Combined market share: 15% ~$1bn Growers facing increased complexity Retailers seeking competitive advantage ~$20bn Syngenta market share Source: Syngenta estimates 55

56 Integration potential in US corn: combined sales $1bn Seeds: step change in germplasm performance Full trait portfolio: yield advantage, refuge capability Market leader in Seed Care: track record of innovation Set to leverage sales through strong retailer presence, integrated sales force 56

57 Triple stack performance: final corn harvest yield results bu/acre Performance improvement in all maturities Syngenta mean - new germplasm combinations - acceleration of trait stacking Top performing products >40% of total in 2011 Increasing recognition: targeting share gain Corn Belt Syngenta Competitor 1 Competitor 2 Source: Syngenta 2010 final harvest data results (iyield) 57 Licensing opportunities, eg MIR604 to Pioneer

58 : unsurpassed performance Performance vs. competitor products yield advantage (bu/ac) Proprietary stacks for broad spectrum insect control Multi-stack outperformance Consistent yield advantage under heavy pest pressure Performance under heavy pest pressure Based on average results over 3 year period, across US 58 Unique lepidopteran trait US Southern refuge reduction to 20% Single trait in Brazil; triple stack approved

59 : complete RIB solutions % refuge Corn Belt / South 2012 Triple stack + 5% refuge Corn Belt: dual mode of action above and below* 5% refuge*: dual mode of action above** and broad lep Dual mode of action with proprietary next generation RW * ** 59 Enabled by Herculex, a trademark of Dow AgroSciences LLC 5% block refuge in the South pending regulatory approval

60 Corn Seeds pipeline: peak sales potential >$2 billion Early development Late development Initial launches Launched Biotic stress 2012 next generation RW Abiotic stress Water opt., nitrogen use efficiency 2014 post 2015 Output traits CarbYield * Approved in Japan, Canada, Australia, New Zealand, Mexico, Philippines * post 2015 Peak sales >$2.0bn

61 Soybean Seeds pipeline: peak sales potential >$700 million Early development Late development Initial launches Herbicide tolerance 2nd generation HT Launched 2010 HPPD solution 2016 / 17 Peak Other input traits sales 2nd generation nematode resistance Aphid management system Launched 2010* >$700m Launched 2010* Rust solution 2012* GM insect resistance post 2015 * Native traits 61

62 Sustained value creation: Corn Seed care: insect, disease, nematode control Broad spectrum weed management Elite, diverse genetics Input traits: herbicide tolerance, insect resistance Water optimization Disease control, crop enhancement >$2.0bn Current sales 62 Bicyclopyrone, cyantraniliprole Enlarged marker assisted breeding ex-us Trait roll-outs: US, LATAM Refuge reduction Next generation corn rootworm control Integrated grower agronomic solutions >$3.0bn Next five years Broad heterotic group between temperate and tropical germplasm Next generation GM abiotic stress offers Global molecular stack for input traits Enhanced integrated solutions: sustainability metrics >$4.0bn

63 Mike Mack Chief Executive Officer

64 Outlook 2011: positive volume momentum - emerging market expansion - market share growth Delivering superior customer and shareholder value Integrate, Innovate, Outperform Average 0.5% pa market share gain across integrated business Combining growth with high profitability: EBITDA margin 22-24% by 2015 Cash Flow Return on Investment above 12 percent Continuous dividend increase 64

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