Syngenta sees ChemChina deal done this year, first-half profit disappoints

© Reuters. CEO Fyrwald of Swiss agrochemicals maker Syngenta addresses news conference in Basel

By Ludwig Burger (Reuters) – Syngenta, the world’s biggest pesticides maker being taken over by state-owned ChemChina, still anticipates the offer to close this year regardless of concerns that U.S. regulators could throw a spanner in the works, it stated on Friday. The Swiss company’s shares slipped after it reported a worse-than-expected drop in first-half profit on Friday, contributing to a heavy discount with ChemChina’s concurred offer rate. “We are having constructive conversations with all governing authorities which enhance our self-confidence in closing the deal by the end of the year,” brand-new Chief Executive Erik Fyrwald stated in Syngenta’s results statement. Syngenta shares were down 0.2 percent at 387 Swiss francs after the pesticides and seeds maker said first-half net earnings fell 13 percent, injured by weak agricultural markets, a rainy summer season in Europe that kept farmers from spraying and an ongoing decrease in sales in Latin America. The share cost is well below ChemChina’s offer of $465 (458 Swiss francs) per share, plus a 5 franc unique dividend – worth a combined 463 francs – and presently hangs a nearly 20 percent gain in front of investors. Nevertheless, there are persistent concerns in financial markets that the offer could yet be ambuscaded by the Committee on Foreign Financial investment in the United States (CFIUS). Syngenta obtains about a quarter of its sales from North America. Syngenta financing chief John Ramsay stated the current share rate discount rate to the offer cost showed financier uncertainty about exactly what stance CFIUS will take. “It’s largely due to the fact that CFIUS is an opaque procedure,” he informed Reuters. “I believe arbitragers usually go out into the marketplace, they listen to the chatter, they take a position. The challenge for everyone is that CFIUS is extremely tight, extremely personal. They do their task professionally but they do not go leaking details.” Liberum expert Sophie Jourdier expects the offer to go through and has a ‘buy’ score on Syngenta, validated by the wide discount between the current share price and the offer cost. Syngenta reported group net income decreased 13 percent to $1.06 billion in the first half from a year previously, below a Reuters survey projection of $1.28 billion. Sales fell 7 percent to $7.09 billion, lagging the market projection of $7.22 billion. In the second half, the group anticipates a go back to growth in Asia Pacific as droughts there alleviate. Growers in Brazil continued to deal with financial unpredictability and credit restrictions. The group reduced its margin target for profits before interest, taxes, devaluation and amortization (EBITDA) over sales to flat, from a previous forecast of a margin improvement on in 2014. “Group sales for the year are expected to be somewhat listed below last year at constant exchange rates; reported sales are likely to reveal a mid-single digit decline due to the continuing strength of the dollar,” CEO Fyrwald said. Effectiveness procedures, lower basic material costs and currency hedging ought to enable Syngenta to keep its full-year EBITDA margin at around in 2014’s level, he said. Disclaimer: Blend Media wish to remind you that the data included in this website is not always real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex rates are not provided by exchanges however rather by market makers, and so prices may not be accurate and might differ from the real market value, indicating rates are a sign and not proper for trading purposes. For that reason Blend Media does n`t bear any duty for any trading losses you might incur as a result of using this information. Blend Media or anybody included with Combination Media will decline any liability for loss or damage as a result of dependence on the details including data, quotes, charts and buy/sell signals consisted of within this website. Please be totally informed regarding the risks and expenses associated with trading the monetary markets, it is among the riskiest financial investment kinds possible.

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