Syngenta AG SYT reported weak trading results for first-quarter 2015, affected by headwinds associated with crop price and currency volatilities. Nevertheless, backed by strategic cost-saving programs, the company still expects to achieve its full-year sales growth target.

Syngenta’s integrated sales for first-quarter 2015 stood at $3.8 billion, up 1% year over year at constant exchange rate (‘CER’). However, group sales for the quarter, including revenues from the Lawn and Garden segment, totaled $4.0 billion, flat compared with the year-ago tally at CER. We believe the strengthening of dollar, with respect to Euro and other currencies used in the Commonwealth of Independent States (‘CIS’), was mainly responsible for the 14% year-over-year downfall in the company’s reported sales figure.  

In first-quarter 2015, Syngenta’s sales from Europe, Africa and the Middle East (EAME) region grew 15% year over year. Losses from weak corn, sugar beet and sunflower acreage was offset by improved business in crop protection, which generated revenues worth $1318 million from the EAME zone, up 18% year over year. Moreover, Syngenta’s EAME trade led other markets in terms of seeds sales that contributed $513 million at the end of the quarter.

The company’s North American sales dropped 16% year over year to $1019 million at CER. A prolonged winter, changes in the company’s distribution model, lesser royalty income and lower corn acreage were the major causes behind the year-over-year sales decline.

Syngenta’s Latin American sales for first-quarter 2015 fell 11% year over year to $495 million at CER, mainly due to inefficient credit management in Venezuela. Moreover, weak insecticides sales on account of lower pest pressure in the region added to the year-over-year decline.

Sales from the Asia Pacific were $502 million, down 6% year over year at CER. A rise in consumption tax in Japan, lower production in Thailand and weaker Chinese demand primarily triggered the year-over-year downfall.  

Poor North American flower business adversely affected the sales in the company’s Lawn and Garden division, which stood at $172 million, down 5% year over year at CER.

Syngenta’s crop protection business generated approximately 70.7% of revenues in first-quarter 2015. Fungicides sales of $982 million topped the segment, up 12% year over year at CER. However, sale of non-selective herbicides declined 30% year over year at CER to $195 million.  

Despite facing short-term headwinds, Syngenta aims to achieve better results on the back of improved liquidity. Through its new Accelerating Operational Leverage program, the company intends to generate adequate free cash flow that will help finance future investment plans. The company also aims to broaden its herbicide portfolio and reap greater revenues in the upcoming quarters. Based on such optimistic plans, the company has maintained its full-year 2015 sales guidance.

Stocks to Consider

With a market capitalization of $31.49 billion, Syngenta currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Adecoagro S.A. AGRO, Asanko Gold Inc. AKG and Icahn Enterprises, L.P. IEP. All three stocks hold a Zacks Rank #2 (Buy).