"2016 was another good year for innovation at Syngenta, demonstrating the power of our R&D engine."
J. Erik Fyrwald
Chief Executive Officer
When I was appointed CEO of Syngenta in June 2016, I was thrilled to return to the world of agricultural technology. The need to grow food sustainably has never been greater and our industry has a vital role to play. I am proud to be part of the Syngenta Team that does so much to help farmers and their communities all around the world.
Common sense of purpose
In my first months at Syngenta, I travelled to every region, meeting our people and the customers they serve. From vegetable and rice growers in Vietnam and China to corn and soybean farmers in the USA and Brazil, and many others, I found a common sense of purpose to produce better crops while making the best use of inputs and natural resources. During my travels, I witnessed firsthand the tremendous energy and dedication of Syngenta employees around the world, who develop and deliver innovative products and agronomic advice to help farmers succeed, and I would like to thank them all for their capabilities and commitment. It is a true joy to see these farmers use our products and services to help improve their lives and lift up their families and communities, while contributing to global food security and a reduction in carbon emissions and water usage.
Robust long-term prospects
With regard to the agriculture industry, 2016 was another difficult year. Crop prices remained low and grower profitability was under pressure in many areas. This led to a contraction in the crop protection market, with the seeds market about flat. It is important to remember that, until 2013, both markets saw years of almost uninterrupted growth, driven by the adoption of innovative technology and intensification. These drivers remain in place as the global demand for grains continues to rise, so we look towards the future with confidence that the prospects for our industry are robust.
Resilient performance in a difficult environment
Our sales in 2016 were 2 percent lower at constant exchange rates and 5 percent lower in reported terms. In the fourth quarter, adjusted for a non-recurring royalty payment, regional revenue growth was 7 percent. We continued our focus on costs through the Accelerating Operational Leverage program and were able to increase EBITDA in the second half. For the full year we generated free cash flow of $ 1.4 billion, helped by our focus on inventory management. Meanwhile, we continued to invest in order to meet demand for best-in-class chemistry and seeds, with the completion of capacity expansion projects at key sites in Brazil and Switzerland.
Proven innovation success
2016 was another good year for innovation at Syngenta, demonstrating the power of our R&D engine. Our new herbicide ACURON™ propelled market share gain in the North American corn market, providing growers with a much-needed solution to the problem of weed resistance. Its success shows that, even in difficult market conditions, growers embrace new technology that can deliver value. In Argentina, we received approval for the breakthrough fungicide ADEPIDYN™, which builds on our strong fungicide heritage including ELATUS™ and AMISTAR® technology. In Brazil, the outstanding performance of our VIPTERA™ insect resistance technology enabled us to grow our corn seed share in this critical market.
Innovation is at the heart of our business model and extends well beyond new crop protection active ingredient launches. Our broad portfolio and formulation expertise enable us to continuously bring new crop protection products to market, addressing the varying and evolving needs of growers of multiple crops in different countries. In Seeds, our breeding capability delivers many new hybrids and varieties every year, providing growers with continuous yield and quality benefits. In those regions where GM technology is accepted, we also offer a leading suite of traits for corn.
Clear corporate goals
This strength in innovation will support the achievement of our first corporate goal, which is to improve the customer experience and to profitably grow market share. Achievement of this goal depends not just on leading innovative products, but also on our entire approach to the customer. The approach varies by market as it is driven by local needs and knowledge.
Our second corporate goal is to drive simplification to continuously improve everything we do, thereby unleashing our people to focus on the customer. We have built the foundations for this through the Accelerating Operational Leverage program, which is now fully embedded across the Company. Our third corporate goal, which we will pursue with continued determination as a private company, is to meet our financial commitments.
New Executive Team established
There were several changes in the Syngenta Executive Team in the course of the year. I warmly thank the three outgoing members – John Ramsay, Davor Pisk and Jonathan Seabrook – for their many years’ service and substantial contributions to the Company. I was pleased to announce the appointments of Mark Patrick as Chief Financial Officer and Jeff Rowe as President Global Seeds and North America. Mark brings more than 20 years’ experience in the Syngenta Finance function. Jeff comes from outside the Company and has tremendous seeds industry experience. In his new role, he will focus on making our performance in seeds match the quality of our technology. The team has been further strengthened with the appointments of Alexander Tokarz as Head Business Development, Mark Titterington as Head Corporate Affairs and Laure Roberts as Head Human Resources – all strong leaders who bring great experience and energy to their new positions.
In 2016, we made progress despite the many challenges we faced in the external environment. Our people remained focused on the business in the knowledge that, under the future ownership of ChemChina, Syngenta will play an increasingly important role in the future of agriculture. I personally am very excited by the growth opportunities that this transaction will bring and look forward to its successful conclusion.
J. Erik Fyrwald
Chief Executive Officer