Credit: Shutterstock photoSummary:
Declining oil prices in the global forum are reducing the marketing expenses of energy-intensive agricultural stocks such as Syngenta. The company's crop-protection business was most successful in the Latin American market, with fungicides, insecticides and selective herbicides being the most sought-after products. For 2014, the company maintained its revenue growth projection at 6%. However, Syngenta's resources spent on new products and technological developments may prove to be futile, if a similar technology is invented by competitors. Also, unfavorable foreign currency transactions will impact the revenues as well as margins of the company. The company is also facing certain legal challenges on grounds of the case filed against it by Scott+Scott. Based on these factors, we are maintaining our Underperform recommendation on the stock.
Overview:
Syngenta AG (SYT) is involved in the manufacturing, marketing and research of seeds and pesticides, in order to enhance crop yields and food quality. The company was founded in 2000, by the merger of Novartis crop protection and seeds businesses, and Zeneca agrochemicals business. Currently headquartered in Basel, Switzerland, the company operates in more than 90 countries. Syngenta's employee strength is over 28,000. The company operates through four segments as discussed below:
Europe, Africa and the Middle East (EAME)
North America
Latin America
Asia Pacific
The above mentioned four regional segments source their revenues from the company's Crop Protection and Seeds businesses. Both businesses are briefly described below:
Crop Protection: This business primarily deals with products such as herbicides, fungicides, insecticides and seed care for various crops such as corn, cereals, fruits, rice and field crops, among many others. These products are sold under brands such as Aatrex, Topic, Horizon, Callisto, Touchdown, Reglone, Bravo, Unix, Karate, Dividend and Cruiser.
Seeds: This business takes care of the production and marketing of genetically developed seeds and plants. The offering of seeds comprises products like corn, sugar beet, oilseeds, cereals and vegetables. Popular brands include names like Golden Harvest, Maribo, Agripro and Coker, among others.
Lawn and Garden: The fifth segment supports the Flowers, home and garden, and the Turf and landscape businesses. Flowers, home and garden business offers a variety of flower seeds, cuttings and young plants along with pesticides for home and garden use. Turf and landscape businesses are used mainly in golf courses, pest management, vector control and vegetarian management. This segment's products are sold under brands like Barricade, Heritage, Goldfisch, Yoder and Actara, among many others.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
