This excerpt taken from the SYT 20-F filed Mar 16, 2005.
Variances in the tables below reflect the profit impact of changes year on year. For example, an increase of sales or a decrease in costs is a positive variance and a fall in sales or increase in costs is a negative variance.
In 2003 operating income increased by 148% to US$521 million. Restructuring and impairment costs varied significantly over the period at US$163 million in 2003 and US$396 million in 2002. The level of restructuring and impairment costs recognized was dependent on the timing of restructuring announcements of decisions on the future use of assets, which led to the recognition of asset impairments. During the periods shown, restructuring and impairment costs were substantially related to the implementation of plans to combine the Novartis agribusiness and Zeneca agrochemicals business to form Syngenta in November in 2000 and to extract cost savings and synergies from the merged business. Integration is now complete. Delivery of the planned synergies is now also largely complete with US$197 million of annual savings in 2003 and cumulative annual savings including 2001 and 2002 of US$559 million. Further details are provided above in OverviewMerger Synergy Program and below and in Notes 7 and 22 of the consolidated financial statements.
Excluding restructuring and impairment costs, operating income in 2003 increased 13% to US$684 million (2002: US$606 million). Although sales were positively impacted by 7% due to currency movements, the weighting of costs in Swiss francs,
British pounds sterling and the euro, together with Syngentas hedging program, meant that the weakness in the US dollar in 2003 had only a minor impact on operating profit in 2003 relative to 2002. Excluding this impact of exchange rate movements, sales were lower in 2003 versus the previous year. Operating income performance in 2003 was driven by improved gross margins from modernization of the range of products offered and delivery of the synergy cost savings in Crop Protection, which together with growth in Seeds, more than offset the lower sales volumes in Crop Protection and the higher pension costs referred to below.
Defined benefit pension costs increased from US$117 million in 2002 (including US$33 million of restructuring costs) to US$175 million in 2003 (including US$46 million of restructuring costs).