Syngenta lifts sales target for key crops

ZURICH Mon Sep 24, 2012 5:47am EDT

The logo of Swiss agrochemicals maker Syngenta is seen in front of a cornfield near the company's plant in Stein near Basel September 18, 2012. REUTERS/Arnd Wiegmann

The logo of Swiss agrochemicals maker Syngenta is seen in front of a cornfield near the company's plant in Stein near Basel September 18, 2012.

Credit: Reuters/Arnd Wiegmann

ZURICH (Reuters) - Syngenta (SYNN.VX), the world's largest agrochemicals company, has raised revenue targets for its eight most important crops, predicting innovation and a more integrated business will more than double sales of seeds and crop protection products by 2020.

The Swiss firm, which last year moved to combine pesticides, fungicides, herbicides and seeds into a single division, said on Monday it now expects sales of products for its eight top crops to reach $25 billion by the end of the decade.

Previously, it had targeted sales for the eight fields - corn, wheat, soybean, rice, sugar cane, vegetables, various field crops and specialty cultures - to reach over $22 billion.

The world's top seed and crop protection companies are battling to develop new technologies that can improve productivity for farmers grappling with increasingly erratic and extreme weather conditions.

On Friday, Syngenta agreed to buy Belgian seed firm Devgen DEVG.BR, attracted in part by its RNAi technology - a naturally occurring mechanism for the regulation of specific genes which scientists want to harness to reduce crop damage.

"I am pleased to say that success in both these areas (innovation and the newly streamlined business) has enabled us to increase our expectations for future growth across our eight strategic crops," said Chief Executive Mike Mack.

Sales of key crops reached $12.4 billion last year.

Shares in Syngenta, which competes with Monsanto (MON.N), Dow AgroSciences and DuPont (DD.N), were up 0.9 percent at 347.10 Swiss francs by 5.05 a.m. EDT, within a slightly lower European chemicals sector .SX4P.

Analysts at Notenstein private bank said Syngenta's strategic realignment would help fend off competition from cut-price competitors.

Like pharmaceutical companies, seed and crop protection firms face cheap, copycat competition, often from companies based in emerging markets.

Deutsche Bank analysts said the group's new forecast implied a compound annual growth rate in sales of 7.3 percent from 2012 from 2020, compared with their current forecast of 5.8 percent.

"It is worth highlighting that the $25 billion sales target is only for the eight key crops ... and we believe other crops also have the potential to grow at a similar rate," they said, keeping a "buy" rating on Syngenta shares.

After upgrading its sales expectations for corn and cereals in May, Syngenta said it had now also raised its outlook for rice and vegetables to a combined $5 billion.

($1 = 0.7699 euros)

(Reporting by Andrew Thompson; Editing by Helen Massy-Beresford and Mark Potter)