Syngenta shares rose, as the ag-chemicals company said it expects its takeover by ChemChina to be completed by the end of the year.
The takeover of Syngenta by state-owned ChemChina is facing regulatory hurdles, including waiting for approval from the Committee on Foreign Investment in the United State.
“We are having constructive discussions with all regulatory authorities which reinforce our confidence in closing the transaction by the end of the year,” Syngenta chief executive Erik Fyrwald said, in the company’s latest financial statement.
Shares turned higher on the news, despite some worse-than-expected profit figures.
Syngenta announced falling earnings and profits, and issued a muted outlook for the full financial year.
“Group sales for the year are expected to be slightly below last year at constant exchange rates; reported sales are likely to show a mid-single digit decline due to the continuing strength of the dollar,” Mr Fyrwald said.
But thanks to efficiency measures, lower raw material costs and currency hedging, Synganta should see similar profit margins to last year, he said.
Results miss expectations
The company reported profits down 13%, at $1.06bn in the first half, comparted to analyst forecasts of $1.28 billion.
Sales fell 7.1% to $7.09bn, compared to analyst expectations of $7.22bn.
The results took a hit from adverse weather in Europe and Asia, which reduced planting.
Wet Europe, dry Asia
“Volumes increased in both Russia and Ukraine, with further price increases implemented to offset the impact of currency depreciation,” Syngenta said.
But elsewhere in Europe, “adverse weather conditions impacted the business”
“North West Europe in particular was affected by heavy rainfall which reduced applications of crop protection products,” Syngenta said.
In North America, the company noted “lower despite challenging grower economics and the deliberate reduction in glyphosate”.
Latin American sales rose, but in Asia, El Nino related drought hit sales, Syngenta said.
“Weather conditions started to improve towards the end of the second quarter but the impact of El Nino on first half performance was still significant.
Vietnam, the Philippines, and Thailand, saw lower rice area and input purchases due to the drought.
Share prices wobbled on the news of the weak results, but then rallied, helped by the reassurance over the ChemChina deal.
Syngenta shares are currently trading well below the 463 Swiss francs a share offered by ChemChina, reflecting market uncertainty that the deal will go through.
Syngenta shares in Zurich were up 1.2% in afternoon deals, at 392.60 Swiss francs.
(Source – http://www.agrimoney.com/news/syngenta-shares-rise-on-chemchina-takeover-optimism–9772.html)