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NOTE

The data provided in the accompanying tables and the analysis for the current quarter ending 30 September 2017 are based on market estimates compiled from different sources as the company has not reported results due to their de-listing from the Swiss and other stock exchanges.

Seeds & Traits Regional Sales

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Europe, Africa and the Middle East

Europe-Africa-Middle East seed sales, which contribute 43.7% of global seeds business were flat, (0.9%), or 0% on a CER basis for the Q3 period while growing 8.8%, or 10% on a CER basis during the 9-months of 2017. Sales for the quarter were slower due to the weather conditions in Europe with flooding in parts of the north and east, and extreme dryness in the south.

For the first 3 quarters, however, sales grew strongly with spring planting of beet, barley, sunflower and corn/maize seed sales in eastern Europe as well as western Europe, dominated by France, with strong competition from Pioneer, Monsanto, Vilmorin and KWS.

Outlook for Q4 and year-end 2017 sales is positive as winter cereal planting is expected to rise compared to last year. In June this year, Syngenta have entered into an agreement with DLF Seeds for the sale of their Hilleshog sugar beet seeds business globally; this would have an impact on future performance in Europe, North America and China.

North America

North American sales, which contribute 31% of global seeds business, increased strongly by 14.8%, or 15% on a CER basis, while they declined slightly (0.9% ) or +1% on a CER basis, during the 9-months of 2017.

Q3 sales saw a sharp increase with contributions coming from corn insecticidal trait royalties from licensees using the MIR162 (Agrisure™ Duracade™) traits and to a lesser extent from soybean seed sales using Monsanto’s licensed-in dicamba-tolerant traits. Since Chinese authorities gave their approval to the corn imports bearing this trait, demand has grown. These helped offset the decline from the first half in Syngenta’s own corn seeds in Q1 as well as lower revenues from up front trait-licensing fees which they did not receive from AgReliant (KWS+Vilmorin jv) which was allocated to North American and Latin American plantings.

Syngenta’s trait-licensing revenues are now split between up-front payments and royalties based on volumes sold by licensees like Pioneer, Monsanto, AgReliance, DAS and others. Syngenta’s performance in North America is therefore highly dependent on trait licensing fees from maize/corn seed sales, and also from cereal (wheat, barley) and other germplasm in their Greenleaf Genetics (GLG) business earning royalties and fees from 3rd party seed producers. Impact of the loss of sales from their divested vegetable and beet seed business in North America continues to be seen here.

Syngenta, with ChemChina’s backing, is seeking to add more seeds to their portfolio. This could easily be available as vegetable seeds from the potential Bayer-Monsanto merger would certainly be a major chunk of their divestment to satisfy anti-trust regulators. Currently and for the near future their performance relies increasingly on trait-licensing which has a direct impact on profitability.

Latin America

Latin American seed sales, which contribute 14.8% of global business, grew by 2% or 2.8% on a CER basis in Q3 and strongly by 15.6% or 17% on a CER basis) during the first 3 quarters of 2017. Sales were driven by corn seeds and Viptera™/Duracade™ licensing revenues in corn from DuPont’s Leptra™ hybrids for the safrinha crop Brazil. Contributions from higher sales of vegetable seeds in Mexico added to the pot.

Positive sales were also attributed to the revised billing system, where goods were transferred to distributors and recognised as sales only when actually purchased by farmers. This reduced carrying cost while ensuring seed availability. The stronger Brazilian Real helped boost value. Outlook for Q4 2017 through Q1 2018 is positive as the main South American season starts only after Q3.

Asia Pacific

The Asia-Pacific region, which contributes 10.4% of global sales, declined by (1.6%) (1.2%) on a CER basis for the quarter, while the decline was smaller (1.0%) or (0.5%) on a CER basis for the 9-months of 2017.

Maize hybrid seeds in SE Asia – especially in Thailand, Vietnam and Philippines have shown success, with their MIR-162 trait-bearing genetically engineered hybrids accepted very well by farmers. Sales decreased slightly in China as the government there is encouraging farmers to return to planting rice by removing incentives for maize. Corn imports from USA and Latin America would easily substitute for locally subsidised corn. The Indian subcontinent has had some vegetable seed sales in irrigated areas.

Syngenta’s investment in the rice/hybrid rice segment is likely to show some results in the irrigated winter rice crop in Q4 2017. The outlook for Q4 2017 sales is slightly positive as the planting season for irrigated corn, winter vegetable and rice hybrid seeds starts in the region.

Total Seeds and Traits Sales by Region

Syngenta’s global seed sales grew by 1.5% or 2.8% on a CER basis during the quarter, while growing 5.5%, or 7% on a CER basis during the 9-months of 2017. Changes for the Q3 season came from volumes +3% and price (1.5%) or volume +3% and price (0.2%) on a CER basis. For the first 3 quarters, however, sales grew 5.5%, volumes 3%, price 2% and currency 0.5%, or on a CER basis, volumes 3%, price3% and currency 1%.

Results were mixed, with the increase in vegetable, sunflower and sugar beet seeds sales in Europe, offset by the lacklustre corn seed sales in Western Europe. North American sales showed growth in soybean seed and trait fees but lower corn seed sales, also impacted by the sale of their beet seed business. Latin America and Asia-Pacific showed growth in hybrid corn and traits and in vegetable seeds. Credit issues also hampered sales in Latin America overall, but were offset by higher prices and the stronger local currency.

The outlook for Q4 2017 is positive for corn seeds and traits in Latin America, SE Asia and Africa; and similarly for cereals – wheat and hybrid barley, rice and vegetable seeds in Europe and Asia. Longer term Syngenta will most certainly increase their presence in seeds by focusing on acquisitions while divesting certain crop protection products to their new family member companies Adama, Sanonda within the China National Agricultural Corporation umbrella.

Seeds & Traits Product Sales

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Corn and Soybeans

Corn and soybean seeds, which contribute 47.8% of global business, saw a significant increase in Q3 by 4.1%, or 4.6% on a CER basis, while increasing 7% or 8% on a CER basis during the first 9 months.

Revenues grew from soybean seed sales in North America and corn seed sales in SE Asia as demand for conventional and GM hybrids was very strong and to a lesser degree, in Latin America. Growth also came from trait royalties licensed out to other major seed companies in North America, Latin America and SE Asia. Soybean seeds showed a strong performance partly from increased acreage and partly from licensing in Monsanto’s dicamba-tolerant traits.

The outlook is positive for Q4 2017 with the start of the Latin America summer season where their corn seeds are in demand along with trait royalties from the other seed producers. Soybean seed sales which were affected last year by the Intacta™ seeds from Monsanto, are expected to improve with licensing-in of the trait.

Diverse Field Crops

Diverse Field crop seeds, which contribute 29.4% of global seeds business, declined (2.6%) or (2.2%) on a CER basis for the quarter, while growing 6.3% or 7% on a CER basis during the 9-month 2017 period. Sales declined in the quarter as their portfolio reduced from beet seed divestment to DLF Trifolium in USA and a poor season for other seeds in Europe, due to the weather.

For the first 3 quarters however, sales grew from sunflower & other seeds in CIS & South- eastern EU countries. Syngenta’s sunflower and hybrid barley continue to perform well in eastern Europe as well as France and other countries. Volumes have grown despite last year’s price increases.

Strengthening of the Russian rouble has also contributed to a good extent. Sugar beet sales were mainly in Europe, which showed growth as planting increased due to higher sugar prices continuing in 2017, but not in USA as they have sold their North American business.

The outlook for Q4 2017 is generally positive as the current cereal harvest in North America and Europe has been hit by adverse weather conditions and commodity prices are stable but likely to increase. This would imply higher cereal seed sales, especially of hybrid barley which is increasing in popularity.

Vegetables

Vegetable seed sales, which contribute 22.8% of global business, grew 2.2% or 3% on a CER basis for the quarter, but grew at a slower pace 1.3% or 2.5% on a CER basis during the 9-months 2017 period.

Performance was driven by sales in Latin America especially Argentina and Mexico. Higher prices were the main reason for growth. Sales were higher in Europe too, despite competition from Bayer. North American sales were impacted by the sale of their business the year before (divesting their watermelon seed business in the USA). Syngenta has withdrawn its original proposal of divesting this highly profitable and high margin seed business (which was in Cropnosis’s opinion a poorly judged move). With the proposed takeover by CNAC (ChemChina) the vegetable seeds business has strong potential to grow in the huge Chinese domestic market.

The outlook remains favourable for Q4 2017 and beyond as the consolidation with CNAC will place them in a favourable position globally.

Total Seeds and Traits Sales

Syngenta’s global seed sales grew by 1.5% or 2.8% on a CER basis during the quarter, while growing 5.5%, or 7% on a CER basis during the 9-months of 2017. Changes for the Q3 season came from volumes +3% and price (1.5%) or volume +3%, price (0.2%) on a CER basis. For the first 3 quarters, however, sales grew 5.5%, volumes 3%, price 2% and currency 0.5%, or on a CER basis, volumes 3%, price 3% and currency 1%.

Results were mixed, with the increase in vegetable, sunflower and sugar beet seeds sales in Europe, offset by the lacklustre corn seed sales in Western Europe. North American sales showed growth in soybean seed and trait fees but lower corn seed sales, also impacted by the sale of their beet seed business. Latin America and Asia-Pacific showed growth in hybrid corn and traits and in vegetable seeds. Credit issues also hampered sales in Latin America overall, but were offset by higher prices and the stronger local currency.

The outlook for Q4 2017 is positive for corn seeds and traits in Latin America, SE Asia and Africa; and similarly for cereals – wheat and hybrid barley, rice and vegetable seeds in Europe and Asia. Longer term Syngenta will most certainly increase their presence in seeds by focusing on acquisitions while divesting certain crop protection products to their new family member companies Adama, Sanonda within the China National Agricultural Corporation umbrella.