Mark Patrick, CFO of Syngenta, a Switzerland-based agribusiness acquired by ChemChina two years ago, speaks with Global Finance about the evolving role of the CFO and cultural adjustments.
Global Finance: What has changed in your function since the acquisition by [state-owned] ChemChina?
Mark Patrick: It’s a big transition from 94 million shareholders to one. Being US-listed and having SEC filings, I would suggest, is actually more onerous than having a single Chinese owner. Businesswise, they pretty much leave us to our own devices. They don’t really have the experience or knowledge to be successful in agribusiness on a global scale in 90 countries.
They are hugely helpful in China, which is probably the last growth opportunity. They can open doors that we could never have: big state farms, huge farms, with a million hectares. We couldn’t even get through the front gate, let alone the front door. Now we have at least the opportunity to show what our technology can do.
GF: This is no big cultural change, then, for Syngenta?
Patrick: No. The management team is three Americans, two Brits and a French national. The board is two Chinese—Gaoning Ning is the chair—and a cross-section of Europeans and Americans. From that perspective, very little has changed.
GF: How does not being publicly held make business better?
Patrick: Our industry is about the long view. Innovation is about thinking five or 10 years ahead. China also takes a long view. The long view of not having the quarterly earnings calls is hugely important. We can focus on driving the right things, rather than worrying about what the buy side or a sell side is thinking about.
GF: If a CFO came to you, and asked, “Should we delist?” you would probably say, “Sure, go for it”?
Patrick: Yes. Not being public has enabled us to focus on the important things. We meet as an executive team every week, every Thursday, irrespective of where we are in the world. We’re moving away from annual budgets, because an annual budget is set at a point in time. We now have just continuous rolling forecasts.
GF: How has the finance team’s brief changed in the past 25 years?
Patrick: Historically, finance people predominantly did controlling and a little bit of value partnering—figuring out how to help drive the business and create value. Much of the controlling work can be done in very different ways today: using robotics, for instance. So how do you shift your organization to automating the things you can do effectively, to actually create more time to support the business? These require fundamentally different skill sets. You need to invest in technology to do the basics of controlling and then develop the capability around value partnering.
GF: One of the key parts of the CFO’s job is financing the business. How has that changed?
Patrick: We did a $4.75 billion bond issue in April last year. It was highly successful: oversubscribed in the US. That has not really changed. If investors believe the story that management is telling, they will loan you the money. I don’t have any problems raising money—bonds, money markets, commercial paper, etc.
GF: Has there been political backlash with the new ownership?
Patrick: No. Not even here in the US. We were concerned at the outset: Would US farmers have an issue [with Chinese ownership]? And then there’s the trade dispute. But business people want to make money, and they will use the best technology they can get. Yes, we may be owned by China; but we’re still a Swiss-based company, and we’re still the same company we were before.
GF: You mentioned that the seeds market in China is highly fragmented. Do people distrust genetically modified (GM) crops? Is there a GM problem there?
Patrick: They distrust only the cultivation. They certainly don’t distrust the consumption; because 90% of GM crops, whether grown in North or South America, end up in China. To cultivate and commercialize seeds in China, you have to be Chinese. Every multinational has a minority stake in a joint venture. By the way, they’ve stopped calling it GM. They call it “bio-breeding.”
GF: Let’s return to the one-versus-94-million-shareholders issue: Could the company go public in China, be listed on a Chinese exchange?
Patrick: The intent from the outset was to IPO a portion—that is very consistent with what China does. The listing could be in Europe, the US or China; or it could be a dual listing. We had a dual listing in the past with the US and Switzerland. The Chinese multiple is good—a little bit higher than you see elsewhere. The time horizon, as we said at the outset, was five years.
The key is for us to articulate what is different with the new Syngenta versus the old Syngenta. If it’s the same story, that won’t be conducive to getting shareholders at the right multiples.
GF: What about the regulatory challenges?
Patrick: [World] society is polarized. The Americans think one way; the Europeans think another way. The US works on a risk-based approach: Crossing the road is risky, but as long as people are informed of the risk, then it’s their choice to make. In Europe, it’s a hazard-based approach with a precautionary principle: If there’s any chance of a product being carcinogenic, they just ban it. They don’t leave it to the choice of the individual; they just say, “No.”
There’s risk in everything we do. You can’t eliminate all risk. The Europeans are trying to do that. I’m very concerned about what this means for innovation and technology going forward.
GF: Is Asia more like the US?
Patrick: Yes. You need a holistic view of this. You can’t just tackle one small component and think you’re going to solve the problem. You just create a different problem. If you ban all synthetic chemicals, farm yields will go down 30%. If yields drop 30%, you may have to use the lands in the Amazon Basin to feed the [world’s] population. You know the consequences of that.
GF: The role of the CFO has grown significantly in recent years. How has your brief expanded?
Patrick: Well, I’m certainly the chief financial officer, but I also have responsibilities in IT and digital, indirect procurement, business intelligence, corporate strategy and planning. Within finance, I lead 1,250 [employees], and in the other functions another 1,250 [out of 28,000 Syngenta employees worldwide], mostly in the IT and digital space.
GF: How often do you get to trade insights with other CFOs—or do you avoid fraternizing for competitive reasons?
Patrick: If you are a CFO, and you spend all your time inwardly focused, you’ll miss the point. I sit on a European CFO council. We meet four times a year. This is a great opportunity to see what others are doing. When I set objectives for my direct reports, one of their priorities each year is to make sure they spend a certain amount of time outside.
One of the reasons I’m here [in the US] is to spend some time with farmers, because getting insight from the front lines is important. I spent several hours this week with a 3,000 hectare corn farmer in Minnesota, fifth generation. They get 200 bushels of corn per acre—pretty efficient. He says, “I’ve got one more year; then I’m dead.” He was telling me ‘you need to reprice your technology, because we can’t afford the premiums you want to charge.’
So now my challenge is to have a conversation with my people: How important is the relationship with these guys—not for 2019, but for 2020, 2023 and 2025—versus making a bit more profit this year. There’s a tradeoff. If they go out of business, that’s not in our best interest. This is the changing face of finance. How do you support your business colleagues in making the right short-, medium- and long-term strategic decisions?
GF: We’ve talked very little about technology. Are you thinking of anything in the realm of cryptocurrency, tokenization, blockchain—that kind of alternative approach to financing?
Patrick: Little. I’m sponsoring a piece of work in the supply chain around blockchain, given the logistics, because I think there is something there. But this is such a broad space; you can get lost in it. I have to say I don’t fully understand all the components.
We have robots performing certain [finance] activities; and we are looking at predictive analytics and AI [artificial intelligence], particularly in the planning and forecasting space. With the exception of the first month’s forecasts, the machine is almost always better than a human.
GF: As a CFO, what keeps you up late at night?
Patrick: Talent and diversity. It’s the key to finance, as it is to everywhere else. In the last two years, I’ve transitioned the team in my function from, to be blunt, a white, Anglo-Saxon, male group to one with much more diversity—of culture, gender and age. You need it. Seven white Anglo-Saxon males who are all Gen Xers isn’t going to cut it.
I recently gave a challenging assignment to a younger Canadian woman with less experience [than others on our team]. Within six months, she had nailed it. When she sat on the leadership team, and I saw what she brought to the party, it was just fantastic. She’s now heading our global seeds finance organization. That’s one example of the benefits of D&I [diversity and inclusion]. If you’re investing in a company, you should absolutely look at their D&I policy and what their data says.