ChemChina will be taking over the Swiss pesticides and seed maker, Syngenta. It is likely that the deal is expected to be completed by the end of the year, it said on Friday, citing a worse-than-expected decline in first-half profit.
"We are having constructive discussions with all regulatory authorities which reinforce our confidence in closing the transaction by the end of the year," new Chief Executive Erik Fyrwald said in its results statement.
Meanwhile, first-half profit was pulled by disappointing agricultural markets, and as Latin American business slumps continued to persist.
Group net income has seen a 13 percent drop to settle at $1.06 billion, suggesting below the analysts’ expected average of $1.28 billion.
Sales declined 7 percent to end at $7.09 billion, with a market outlook of $7.22 billion.
"After a resilient first quarter, market conditions were more difficult in the second quarter, notably for the high- margin Europe, Africa and the Middle East business," Fyrwald said.
He anticipates a return to growth in the second half in Asia Pacific as insufficiency started cooling there. Growers in Brazil remained threatened by economic uncertainty and credit constraints, despite a booming profit.
"Group sales for the year are expected to be slightly below last year at constant exchange rates; reported sales are likely to show a mid-single digit decline due to the continuing strength of the dollar," he added.
Fyrwald also mentioned that efficiency measure, along with cheaper raw material costs and currency hedging must be allowed in order to aid its full-year EBITDA margin similar to the prior year’s level.
Regulatory Talks: Constructive
As Syngenta AG has agreed to be taken over by ChemChina for $43 billion, the Swiss company mentioned that regulatory authorities in winning the deal’s approval have been constructive and is confidently certain that the transaction will be completed at any time.
According to the Basel-based company in a statement, talks with all regulatory authorities are continuing and the objective is anticipated to accomplish the deal by year end.
Syngenta issued financial earnings before interest, taxes, depreciation and amortization of $1.77 billion, suggesting below than an average forecast profit of $1.91 billion.
Chief Executive Officer Erik Fyrwald currently in his seven weeks, working on steering Syngenta through its takeover by ChemChina and has streamed line a cost base to adapt to the tight competition.
Subsequently, a buffer will be shed by the Chinese parent to-be if grain prices decline.
Read the current news from FSM News and subscribe to our daily newsletter to receive reliable updates every day.