Annual Review 2016 - Syngenta
Annual Review2016
iSyngentaAnnual Review 2016In this year’s reportStrategic overviewiiRegional overviewOperational performance35 Making a habit of being ever betteriii Group performance36 People01 Bringing plant potential to life37 Sustainable operations02 Chairman’s statement41 Business integrity04 Chief Executive Officer’s statement43 Public debates06 Our business modelPerformance dataResearch and Development08 Stepping up productivityand innovationThe Good Growth Plan12 Adding value sustainably13 Make crops more efficient14 Rescue more farmland16 Help biodiversity flourish17 Empower smallholders19 Help people stay safe20 Look after every worker45 Product line performance46 Financial information53 Non-financial information61 Independent Assurance Reporton the Syngenta Non-financialReporting 201602This change of shareownership allows Syngentato remain Syngenta, a globalcompany headquarteredin Switzerland, focusedon sustainable growth.Michel DemaréChairmanCorporate information62 Corporate governanceand compensation64 Board of Directors66 Executive Committee68 Shareholder informationRegional performance22 New technologies driving growth23 Europe, Africa and Middle East26 North America29 Latin America32 Asia PacificAbout the Syngenta Annual ReportThe full edition of Syngenta’s Annual Report 2016 comprises:3 the Annual Review 2016, summarizing both financial and non-financial performance3 the Financial Report 20163 the Corporate Governance Report and Compensation Report 2016The Annual Review includes quantitative and qualitative information on policiesand actions taken regarding our business and corporate responsibility goals.042016 was another goodyear for innovation atSyngenta, demonstratingthe power of ourR&D engine.J. Erik FyrwaldChief Executive OfficerSyngenta’s Annual Report also servesas our annual Communication onProgress (COP) for the United NationsGlobal Compact. To read the fullSyngenta Annual Report 2016, go towww.ar2016.syngenta.comFor further information, includingthe Form 20-F, the Our Industrypublication and a section withanswers to many “Questions aboutSyngenta”, visit our corporate website:www.syngenta.com
iiSyngentaAnnual Review 2016Regional overviewNorth AmericaEurope, Africa and Middle EastSales1 mEmployees 2Research and Development sitesProduction and Supply sites3,2024,1763331Sales1 mEmployees 2,3Research and Development sitesProduction and Supply sitesNorth America comprises Canadaand the USA. It generates about25 percent of Syngenta’s revenue,and its growers – among the mostcompetitive and productive in theworld – are typically early adoptersof new technologies.EAME is our largest region in termsof sales. At present, our businesscomes mainly from Europe, withan increasing share of future salescoming from markets like Russia,Ukraine and Africa.Read more on pages 26–28Read more on pages 23–25NorthAmericaEurope, Africaand Middle East90Productionand Supply sites 427,810Employees ificResearch andDevelopment sitesAsia PacificLatin AmericaSales1 mEmployees 2Research and Development sitesProduction and Supply sites3,2935,1611212Latin America accounts for almost10 percent of the world’s cropped area andis the global leader in soybean, sugar caneand coffee production. Farm scale rangesfrom a predominance of smallholdersin Central America to highly-technifiedlarge-scale farms in Argentina and Brazil.Read more on pages 29–311 Excluding Lawn and Garden2 Permanent full-time equivalent (FTE) as of September 30, 20163 Including headquarters (Switzerland)4 Including four multi-functional production sitesSales1 mEmployees 2Research and Development sitesProduction and Supply sites1,8396,0442720Accounting for 40 percent of theworld’s cultivated land, APAC isa region dominated by smallholdersfarming less than 2 hectares.Changing diets and good scope forimproving yields present significantopportunities for growth.Read more on pages 32–34
iiiSyngentaAnnual Review 2016Group manceGroup sales 12.8bn-2% (CER1)Cash flow returnon investment4People trained on safe 0155.7201415.13201411%20144.7Crop Protection sales2Seeds sales 9.6bn 2.7bn-2% (CER1)Seed supply farmsin our Fair Labor Program82%-3% 84%201411.3820143.16201453%Earnings per share3EBITDA 17.03 2.7bn-4%Recordable illnessand injury rate60.39 2% 150.38201419.4220142.9320140.37Research andDevelopment investmentEfficiency savings5Smallholders reached7 1.3bn 517.220141.43201413.812345Growth at constant exchange rates (CER)Including sales of Crop Protection products to SeedsFully diluted excluding restructuring and impairmentFor a definition of cash flow return on investment, see page 52Cumulative since 2015Read more about “Financial information”on pages 46–526 Per 200,000 hours, according to US OSHA definition7 Through salesRead more about “Non-financial information”on pages 53–60
Strategic overviewBringing plant potential to lifeWe apply world-class science andthe most productive research anddevelopment in the industry to achievea step change in agricultural productivity.In more than 90 countries around theworld, our employees enable millions offarmers to improve global food securityby making better, more sustainableuse of available resources.SyngentaAnnual Review 201601
02SyngentaAnnual Review 2016Chairman’s statementEnsuring choiceand innovation forgrowers worldwideThis change of shareownership allowsSyngenta to remainSyngenta, a globalcompany headquarteredin Switzerland, focusedon sustainable growth.Michel DemaréChairman2016 has been a momentous year forSyngenta and for the agriculture sector.In the wake of challenging marketconditions and rising innovation costs,our industry has embarked on a waveof consolidation, which has a profoundtransformational impact for all the playersinvolved. I am pleased that Syngenta,after a period of turbulence, has found apath that guarantees the Company’s longterm future and safeguards its identity.The option we have chosen is more achange of ownership than a consolidationmove. Syngenta will remain Syngenta,as you have known it for years, with thesame commitment towards food security,innovation and farmers, whatever the sizeof their farms.The closing of such a transaction obviouslytakes time, as it requires review andapproval from a large number of regulatoryauthorities. In the meantime, we are notstanding still and waiting for the changes tohappen. We have worked hard at adaptingSyngenta to the new realities of ourmarkets. Profound management changes,starting at the CEO level, are coupled withcrucial simplification initiatives to makethe Company leaner and faster to makedecisions. We have clarified our strategy,giving our Seeds business a much moretransparent focus and expanding our skillsand capabilities, with an immediate, verypositive response from our customers.We continue expanding and investing in ourleading Crop Protection business with thesame intensity. And we continue offering,wherever appropriate and in different forms,an integrated approach to our customers,tailor-made to their needs and expectationsof what a broad portfolio company likeSyngenta can offer them.While the instability that beset emergingmarkets in 2015 to some extent subsided,market conditions in 2016 remainedtough for the fourth consecutive year.Syngenta had already responded quicklyto a more challenging environment withthe announcement, in February 2014, ofthe Accelerating Operational Leverageprogram. This has already yieldedsubstantial cost savings, and I have beenimpressed by the way in which the entireorganization has adapted to the processand platform efficiencies put in place.Innovation is vitalHowever, for a company like Syngenta,cost savings alone cannot drive longerterm performance. Growth is the key factorfor long-term success and, in our field,it means that our business is dependenton continuous innovation, whether thisbe in the form of new crop protectionproducts, improved seeds or novel traits.The development timelines are long,often exceeding ten years. Regulation isbecoming ever more demanding, meaningthat the cost of bringing a new productto market increases while the certaintyof achieving approval diminishes. Whenrevenues are under pressure – as they havebeen in recent years – it becomes difficultto sustain Research and Development(R&D) at the necessary level. This dilemmahas been one of the catalysts forindustry consolidation.ChemChina transactionreinforces strategyThe transaction with ChemChina willsecure Syngenta’s long-term investmentin innovation. ChemChina has recognizedthe value of our pipeline and of our worldleading scientists, and has explicitlycommitted to maintaining a high levelof R&D spend in the coming years.This transaction reinforces our strategy
SyngentaAnnual Review 2016Strategic overview03Management changesIn May, after a rigorous search, theBoard announced the appointment ofErik Fyrwald as Chief Executive Officer.Erik’s considerable experience in bothagriculture and chemicals, along with hisstrong track record of success as a CEO,made him an excellent candidate for therole. I look forward to continuing to workwith him to create the next chapter inSyngenta’s history.of being a leading provider of technologyand will ensure continued choice forgrowers worldwide. It will allow us tomaintain a broad portfolio and geographicpresence and to further strengthen ourposition in emerging markets, notably inChina itself.We are excited by the opportunity toassist in the ongoing modernization ofChinese agriculture, bringing not onlyour products but also our experienceand know-how in promoting the highestenvironmental standards. Sustainability hasalways been at the core of our businessmodel, impacting the way we do businesson a day-to-day basis, and reinforcedby our smallholder-focused initiativesthrough the Syngenta Foundation andthe commitments contained in TheGood Growth Plan. ChemChina hasenthusiastically endorsed these values andprinciples, which are the foundation of ourCompany and will remain so in the future.Transparency and partnershipbring added valueIn 2016, we made further progresstowards meeting our Good Growth Plantargets for 2020. An expanding networkof partnerships is enabling us to broadenour contribution by combining our skillswith the expertise and reach of others.Data on each of the commitments isindependently collected and validated andour open data policy allows people to maketheir own assessment of our progress.We are further promoting transparencyas a partner in GODAN, the Global OpenData for Agriculture and Nutrition initiative,a public/private collaboration of more than400 organizations that supports globalefforts to make agricultural and nutritionallyrelevant data accessible and usable.Living our company valuesThe launch of The Good Growth Planin 2013 was not a new beginning forSyngenta – it represented a continuationand a quantification of a long-standingfocus on sustainability. This focus hasbeen embraced by the Company’s28,000 employees and infuses its cultureand values. In November, I was privilegedto host the 2016 Syngenta Awardsceremony, at which outstanding teamsfrom around the world were recognizedfor their contributions to those values andto the company purpose of Bringing plantpotential to life. The entries were withoutexception inspiring, and I was deeplyimpressed by the passion, motivationand spirit of healthy competition thatreverberated through the event.After a career at Syngenta and legacycompanies spanning 32 years, JohnRamsay decided to retire from theCompany at the end of September.John was instrumental in the foundationof Syngenta and served with distinctionas Chief Financial Officer since 2007 andlatterly also as Chief Executive Officerad interim. I should like to thank John forleading the Company during a period ofuncertainty with great skill and judgment.I should also like to thank employees, whohave worked tirelessly through a time ofturbulence, for their dedication and loyalty.Syngenta remains SyngentaMany of Syngenta’s shareholders investedin the Company for the long term andremain invested today. I am glad thatthey will be amply rewarded throughChemChina’s recognition of the Company’sstrategic value. This is a transactionthat benefits not just shareholders butall stakeholders, including customers,employees and communities. This changeof share ownership allows Syngenta toremain Syngenta, a global companyheadquartered in Switzerland, focusedon sustainable growth and committedto helping growers worldwide achievefood security.Nequae prenita.Michel DemaréChairman
04SyngentaAnnual Review 2016Chief Executive Officer’s statementA clear senseof purpose in achanging industryenvironment2016 was another good yearfor innovation at Syngenta,demonstrating the powerof our R&D engine.J. Erik FyrwaldChief Executive OfficerWhen I was appointed CEO of Syngentain June 2016, I was thrilled to return to theworld of agricultural technology. The needto grow food sustainably has never beengreater and our industry has a vital role toplay. I am proud to be part of the SyngentaTeam that does so much to help farmersand their communities all around the world.Common sense of purposeIn my first months at Syngenta, I traveledto every region, meeting our people andthe customers they serve. From vegetableand rice growers in Vietnam and China tocorn and soybean farmers in the USA andBrazil, and many others, I found a commonsense of purpose to produce better cropswhile making the best use of inputs andnatural resources. During my travels, Iwitnessed firsthand the tremendous energyand dedication of Syngenta employeesaround the world, who develop and deliverinnovative products and agronomic adviceto help farmers succeed, and I wouldlike to thank them all for their capabilitiesand commitment. It is a true joy to seethese farmers use our products andservices to help improve their lives andlift up their families and communities,while contributing to global food securityand a reduction in carbon emissions andwater usage.Robust long-term prospectsWith regard to the agriculture industry,2016 was another difficult year. Crop pricesremained low and grower profitability wasunder pressure in many areas. This ledto a contraction in the crop protectionmarket, with the seeds market aboutflat. It is important to remember that,until 2013, both markets saw years ofalmost uninterrupted growth, driven bythe adoption of innovative technology andintensification. These drivers remain in placeas the global demand for grains continuesto rise, so we look towards the future withconfidence that the prospects for ourindustry are robust.
SyngentaAnnual Review 2016Strategic overviewResilient performancein a difficult environmentOur sales in 2016 were 2 percent lowerat constant exchange rates and 5 percentlower in reported terms. In the fourthquarter, adjusted for a non-recurringroyalty payment, regional revenue growthwas 7 percent. We continued our focuson costs through the AcceleratingOperational Leverage program and wereable to increase EBITDA in the second half.For the full year we generated free cashflow of 1.4 billion, helped by our focuson inventory management. Meanwhile,we continued to invest in order to meetdemand for best-in-class chemistry andseeds, with the completion of capacityexpansion projects at key sites in Braziland Switzerland.Proven innovation success2016 was another good year for innovationat Syngenta, demonstrating the powerof our R&D engine. Our new herbicideACURON propelled market share gainin the North American corn market,providing growers with a much-neededsolution to the problem of weed resistance.Its success shows that, even in difficultmarket conditions, growers embracenew technology that can deliver value.In Argentina, we received approval forthe breakthrough fungicide ADEPIDYN ,which builds on our strong fungicideheritage including ELATUS and AMISTAR technology. In Brazil, the outstandingperformance of our VIPTERA insectresistance technology enabled us to growour corn seed share in this critical market.Innovation is at the heart of our businessmodel and extends well beyond newcrop protection active ingredient launches.Our broad portfolio and formulationexpertise enable us to continuously bringnew crop protection products to market,addressing the varying and evolvingneeds of growers of multiple crops indifferent countries. In Seeds, our breedingcapability delivers many new hybrids andvarieties every year, providing growerswith continuous yield and quality benefits.In those regions where GM technology isaccepted, we also offer a leading suite oftraits for corn.Clear corporate goalsThis strength in innovation will supportthe achievement of our first corporategoal, which is to improve the customerexperience and to profitably growmarket share. Achievement of this goaldepends not just on leading innovativeproducts, but also on our entire approachto the customer. The approach variesby market as it is driven by local needsand knowledge.Our second corporate goal is to drivesimplification to continuously improveeverything we do, thereby unleashingour people to focus on the customer.We have built the foundations for thisthrough the Accelerating OperationalLeverage program, which is now fullyembedded across the Company.Our third corporate goal, which we willpursue with continued determinationas a private company, is to meet ourfinancial commitments.05New Executive Team establishedThere were several changes in theSyngenta Executive Team in the courseof the year. I warmly thank the threeoutgoing members – John Ramsay,Davor Pisk and Jonathan Seabrook – fortheir many years’ service and substantialcontributions to the Company. I waspleased to announce the appointmentsof Mark Patrick as Chief Financial Officerand Jeff Rowe as President Global Seedsand North America. Mark brings morethan 20 years’ experience in the SyngentaFinance function. Jeff comes from outsidethe Company and has tremendous seedsindustry experience. In his new role, hewill focus on making our performance inseeds match the quality of our technology.The team has been further strengthenedwith the appointments of Alexander Tokarzas Head Business Development, MarkTitterington as Head Corporate Affairsand Laure Roberts as Head HumanResources – all strong leaders who bringgreat experience and energy to theirnew positions.In 2016, we made progress despite themany challenges we faced in the externalenvironment. Our people remained focusedon the business in the knowledge that,under the future ownership of ChemChina,Syngenta will play an increasingly importantrole in the future of agriculture. I personallyam very excited by the growth opportunitiesthat this transaction will bring and lookforward to its successful conclusion.J. Erik FyrwaldChief Executive Officer
06SyngentaAnnual Review 2016Our business modelCreating valueby taking along-term viewOur ability to create value for employees, the communities wherethey live and for all other stakeholders is contingent on the valuewe create for our customers.Our innovation enables farmers – from smallholdings to large-scalefarms – to safely produce food, feed and other plant-based productsas efficiently as possible, without using more natural resources.We take a long-term view to developing technologies that will not justmeet demand in the years to come, but will do so without depletingalready overstretched resources.Our broader value proposition comes notjust from the food that we help farmersproduce today, but from the support wegive them in building prosperous ruralcommunities and sustainable farmingpractices. That’s why our Good GrowthPlan commitments are integral to ourb
Syngenta Annual Report 2016, go to www.ar2016.syngenta.com For further information, including the Form 20-F, the Our Industry publication and a section with answers to many “Questions about Syngenta”, visit our corporate website: www.syngenta.com About the Syngenta Annual Report The full edition of Syngenta’s Annual Report 2016 comprises:
the Our Industry publication and a section with answers to many “Questions about Syngenta”, visit our corporate website: www.syngenta.com Syngenta’s Annual Report also serves as our annual Communication on Progress (COP) for the United Nations Global Compact. You can find our online Annual Report 2015 on: www.ar2015.syngenta.com ii-09
2016 Our industry 2016. Food Feed Fuel 3 2 1 0 1.2-1.6% CAGR 1980 1990 2000 2015 2027 . Sources: USDA; FAPRI; Syngenta analysis Syngenta at a glance Introduction. Contents 01 Global challenges Global agriculture: growing more from less 4 Demand 5 Environmental stress 10 02 Sustainable
a wave of consolidation in the agricultural seeds and chemical industry. (ii) Chem-China and Syngenta China's National Chemical Corp (Chem-China) in February 2016 agreed to acquire Syngenta for about 43 billion months after Monsanto abandoned its own bid for Syngenta, a Swiss firm (Bloomberg, 2016a).
Syngenta Global Head of Lawn & Garden Carin Koch Syngenta Golf Ambassador Unlocking Golf’s True Potential Syngenta is a global agriculture company, employing more than 28,000 people in 90 countries. For more than 30 years we have also been a market leader in the global golf industry creating innovative turf management solutions for golf
The purpose of this Code of Practice is to define the safety and security checks that are necessary for the safe and secure transport of Syngenta products in containers. These checks will: Ensure that containers used to transport Syngenta products are fit for purpose and can be loaded safely Ensure compliance with the IMDG code
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seeds.22 More than one-fourth (25.9 percent) of Syngenta’s 13.4 billion in global 2015 sales were generated in the United States.23 In August 2016, U.S. regulators approved the ChemChina-Syngenta deal and Australia declined to block the merger in December 2016, but the antitrust review is still pending in the European Union.24
Unit 39: Adventure Tourism 378 Unit 40: Special Interest Tourism 386 Unit 41: Tourist Resort Management 393 Unit 42: Cruise Management 401 Unit 43: International Tourism Planning and Policy 408 Unit 44: Organisational Behaviour 415 Unit 45: Sales Management 421 Unit 46: Pitching and Negotiation Skills 427 Unit 47: Strategic Human Resource Management 433 Unit 48: Launching a New Venture 440 .
