ZURICH (Reuters) – Swiss agrochemicals group Syngenta expects crops output in Ukraine to slump substantially this year, it said on Thursday, as it announced fourth-quarter results.
“We hope to be able to save around two-thirds of what would normally be possible,” a spokesperson said on Thursday, referring to the Ukrainian crops harvest. “We definitely don’t expect a total failure.”
The Chinese-owned group, which aims to raise around $10 billion from an initial public offering, sells both crop protection products and seeds.
It said it was now selling these at the price of cost in Ukraine to ensure as high a harvest as possible.
“We are on the brink of a global food crisis,” CEO Erik Fyrwald said in a post LinkedIn, referring to the destruction of infrastructure, disruptions of transport and land and water contamination which he said were making it impossible for farmers to work.
Outside of conflict, the current growing season was also being affected by unprecedented floods, droughts and high levels of pest infestation, he said.
Ukraine is a major global agriculture producer and exporter, and Russia’s invasion of the country is expected to sharply reduce the 2022 harvest, with Agriculture Minister Roman Leshchenko telling Reuters its spring crop sowing area may more than halve this year.
Syngenta employs around 730 people in Ukraine and about 800 in Russia. It said it has no plans to withdraw from Russia. Crop production is not subject to various sanctions imposed on Moscow.
On a revenue basis, it said Ukraine and Russia each accounted for less than 2% of group sales.
Across the group, it said fourth quarter sales increased by 17% to $7.2 billion as it benefited from farmers investing in seeds and sprays to boost production.
It said it had increased revenue generated from its training centres in China, where it added 167 new sites in 2021 to take its total to 492.
The sites train farmers in the latest agricultural techniques as well as supply equipment, seeds and pesticides.
Syngenta said it had continued to manage its supply chain in the face of procurement and other problems.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4% to $1.1 billion during the fourth quarter.
Syngenta, which competes with Germany’s Bayer and U.S. agrochemicals company Corteva, was bought by state-owned ChemChina for $43 billion in 2017, and is currently looking into a flotation.
(Reporting by John Revill and Oliver Hirt; writing by Brenna Hughes Neghaiwi; editing by Jason Neely)