Dive Brief:
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Syngenta Group on Monday reported substantial sales and profit declines in the first quarter as the seed and pesticide maker continues to face destocking issues with farmers cutting back on expenses.
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Sales fell by $1.8 billion, a 20% decline over last year, due to ongoing inventory destocking from weak demand. Core operating profit sank 34% to $1.2 billion, according to the company
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Amid the tough market backdrop, Syngenta said it’s focusing on improving operational efficiency and profitability. The company recently withdrew plans to go public in China, and will restart the listing process when conditions improve.
Dive Insight:
As farmers face high labor, equipment and crop protection costs, they are pulling back on expenses when they can.
The weakened demand for pesticides has hurt large agrochemical firms like Bayer, Corteva and Syngenta in recent quarters, and continues to fuel inventory destocking by retailers and distributors around the world.
In North America, Syngenta’s crop protection sales were 44% lower with customers delaying purchases until the start of the planting season. The unit also experienced sales declines of more than 20% in Asia, Africa, Europe and the Middle East driven by cautious purchasing behaviors.
Syngenta said these results were expected as consumers feel the pressures of low working capital and high-interest rates. The company had weaker margins over last year and plans to focus on strategies that offset lower sales volumes and prices moving forward.
A persistently unfavorable market played a role in Syngenta withdrawing its application to be listed on the Shanghai Stock Exchange after three years of waiting.
“It will look to restart the listing process, either in China or a different global exchange, when the conditions are right,” Syngenta said in late March.