Caixin
Apr 29, 2021 06:32 PM
BUSINESS & TECH

With IPO on Its Agenda, Syngenta Group Reports Accelerating Growth

Syngenta Group’s headquarters in Basel, Switzerland. Photo: Syngenta Group
Syngenta Group’s headquarters in Basel, Switzerland. Photo: Syngenta Group

Chinese-owned global agricultural giant Syngenta Group reported a strong pick-up in revenue growth in the first quarter, as a media report said the company formed last year through a merger of assets in Europe, Israel and China may be accelerating its IPO plans with an aim to list this year.

The Swiss-based group said its sales rose 20% in the first quarter of 2021 to $7.1 billion, according to an announcement on Thursday. That marked an acceleration from the full-year 2020 when the company’s revenue grew by a more modest 5% to $23.1 billion.

As a private company, Syngenta is not required to release financial reports. Its main assets are the previously publicly traded Syngenta AG, as well as Israeli-based Adama and the agricultural businesses of China National Chemical Corp. (ChemChina). The new Syngenta Group is Chinese-owned but based in Switzerland.

The group’s earnings before interest, taxes, depreciation and amortization (EBITDA), often considered a measure of operating profit, rose 19% to $1.5 billion in the first quarter, also accelerating from a 3% rise for all of 2020.

“Following a robust full year 2020 performance, Syngenta Group continued its strong growth trajectory in the first quarter. All businesses delivered broad-based, double-digit growth,” the group said in a statement. “EBITDA increased significantly and EBITDA margin was maintained with a focus on operational efficiency.”

The company said that sales for its biologicals unit were particular strong, up 40% in the first quarter from a year earlier on a comparable basis. Including results from its acquisition of Italian company Valagro last fall, the biological unit’s revenue more than doubled year-on-year. Also performing well was its modern agriculture platform, which provides farmers access to market-leading technologies, with sales tripling to $280 million for the quarter.

Among its major business units, its Syngenta Group China was by far the strongest as that country emerged earlier than the rest of the world from the global pandemic. Syngenta Group China’s sales rose 41% to $2.2 billion, accounting for 31% of the group’s total. The weakest performance came from Adama, whose first-quarter sales were still up 14% year-on-year.

“We delivered strong sales and profit growth across all business units,” said Syngenta Group CFO Chen Lichtenstein. “Our success in China is fueled by our strong offering and farmer-centric ecosystem. We aim to continue driving growth, focusing on operating margins and further accelerating our innovation pipeline.”

Syngenta Group announced the results a day after a report in German publication Handelsblatt, citing unnamed finance and industry sources, reported the company was considering accelerating its plans for an IPO to possibly make the listing this year, compared with a previous timetable for 2022.

China’s state-owned ChemChina first purchased a majority of Adama about a decade ago, and acquired the remainder in 2016. ChemChina then completed its purchase of Syngenta AG a year later in a landmark deal worth $43 billion, much of that paid for with debt.

ChemChina more than doubled its assets through the Syngenta AG purchase, but the deal also propelled its debts beyond 434 billion yuan ($67 billion), up 88% from six months prior to the acquisition, raising questions about the state-owned giant’s ability to integrate the Swiss company. Those debts continued to grow, hitting 647.58 billion yuan at the end of September 2019, when the company’s asset-liability ratio swelled to 77.38%.

Contact reporter Yang Ge (geyang@caixin.com)

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