Abrupt and unprecedented reductions in inventory by growers and the distribution channel led to significant volume decline despite steady on-the-ground consumption.
FMC Corporation has reported second quarter 2023 revenue of $1.01 billion, down 30 percent versus second quarter 2022, and down 28 percent organically. On a GAAP basis, the company reported earnings of $0.24 per diluted share in the second quarter, a decrease of 77 per cent versus second quarter 2022. Second quarter adjusted earnings were $0.50 per diluted share, down 74 percent versus second quarter 2022.
“FMC delivered second quarter results in-line with recently adjusted guidance expectations. Active inventory management by growers and the distribution channel drove unprecedented volume declines and as a result we now expect the overall crop protection market to contract high-single-digits to low-double-digits percent this year despite steady on-the-ground usage by growers,” said Mark Douglas, FMC president and chief executive officer.
Revenue in the quarter was driven by a 31 per cent decline from volume. Price was up 3 percent, partially offset by a 2 percent foreign currency headwind. Demand for the company’s innovative products remained resilient as sales from new products launched in the last five years were essentially flat to the prior-year period despite the overall sales drop. Branded diamides performed better than the rest of the portfolio, with reduced partner sales the main driver of volume decline in diamides.
North America revenue was down 25 percent (down 24 percent organically) versus the prior-year period as partners, the distribution channel and growers reduced inventory. Branded diamides in the region showed strong growth largely due to high insect pressure in Canada. Sales in EMEA declined 26 percent (down 24 percent organically) compared to second quarter 2022 due to channel and grower destocking as well as adverse weather conditions across Europe. Volume headwinds were partially offset by strong pricing gains in the region. In Latin America, revenue was down 38 percent versus the prior-year period driven by significantly lower volumes as destocking was amplified by a historic drought in southern Brazil and Argentina. Sales in Asia declined 29 percent (down 23 percent organically) year-over-year.
As expected, India continued to manage high channel inventory and was impacted by challenged growing conditions in most of the country. Globally, Plant Health revenue was down 31 per cent (down 25 percent organically) versus prior year driven by similar channel dynamics as the rest of the crop protection portfolio.
FMC second quarter adjusted EBITDA was $187.6 million, a decrease of 48 per cent from the prior-year period. The negative impact of volume more than offset the gains from better year-over-year prices and costs. Cost was a positive driver of adjusted EBITDA for the first time since 2020. FX was a headwind to adjusted EBITDA.
Full Year 2023 Outlook2
Consistent with the company’s release on July 10, FMC is forecasting full-year 2023 revenue to be in the range of $5.20 billion to $5.40 billion, reflecting a 9 percent decline at the midpoint versus 2022 and full-year adjusted EBITDA is expected to be in the range of $1.30 billion to $1.40 billion, representing 4 percent decline year-over-year at the midpoint. The forecast for the 2023 adjusted earnings range is lowered to $5.86 to $6.80 per diluted share, representing a year-over-year decrease of 15 percent at the midpoint. The company is lowering full-year free cash flow guidance to a range of negative $175 million to positive $175 million due to the lower revenue generated in the first half of the year, lowered adjusted EBITDA guidance and expected lower payables at year end.
