Syngenta all-but gave up hope of growing earnings after an 8.7% slide in earnings in the first half, as headwinds including lower wheat acreages and Eastern Europe's credit squeeze took their toll.

The Swiss group, the world's largest agrochemicals company, said it was aiming for earnings per share "close to" last year's level, rather than the improvement it had previously hoped for.

"Achieving earnings growth has become more challenging," chief executive Mike Mack said.

Market reaction

The warning sent Syngenta shares down 6.7% to SFr239.50 in Zurich, wiping SFr1.64bn ($1.53bn) from its market capitalisation. 

Martin Schreiber, analyst at ZKB, said he had "already considered the old outlook too ambitious", forecasting a drop of 1% in Syngenta's underlying earnings per share.

Credit Suisse termed the results "a weak set of numbers marred by strong volume declines, weakening margins [and] poor cash flow".

The investment bank added: "We think investors will be disappointed despite share price weakness into numbers."

Dry weather impact

The group's performance in the April-to-June period, when sales dropped 13.5% to $3.03bn, was in part down currency movements.

However, it also reflected reduced wheat plantings in the US and Europe, and dry weather in Latin America, which sent fungicide sales down 15%, even allowing for currency swings.

Indeed, crop protection products led the decline in group takings with insecticide sales down 6% at constant exchange rates, thanks to reduced pest outbreaks in Latin America and Western Europe, and revenues from non-selective herbicides, such as the Gramoxone and Touchdown brands, down 9%.

By region, European takings were particularly weak, down 12%, thanks to "reduced grower liquidity" in Eastern Europe.

Seed sales improve

Sales in the smaller seed division hit $622m, up 14% at constant exchange rates, helped by price increases and stronger takings from genetically modified sugar beet in the US and higher demand for corn in Asia.

Over the first six months as a whole, earnings fell to $1.39bn on revenues down 8.8% at $6.66bn.