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Company News, Finance, World

Third quarter results significantly impacted by lower sales in Latin America channel destocking in all regions

FMC Corporation reported a third-quarter 2023 revenue of $982 million, a decrease of 29 per cent versus the third quarter of 2022 and down 29 per cent organically. On a GAAP basis, the company reported a net loss of $0.03 per diluted share in the third quarter, down 103 per cent versus the third quarter of 2022. Adjusted earnings were $0.44 per diluted share, a decrease of 64 per cent versus the third quarter 2022.

“Our results were significantly below the prior year driven by volume headwinds from a continuation of channel destocking behaviour that began in the prior quarter.  Destocking was much worse than anticipated in Brazil. Despite this, on-the-ground application remains steady as growers continue to protect their crops,” said Mark Douglas, FMC president and chief executive officer.  “Branded diamides and our new products outperformed the overall portfolio, which illustrates robustness for differentiated and higher value products even in challenging environments.”

Revenue in the quarter was driven by a 26 per cent decline in volume. Price increases in North America, EMEA and Asia were more than offset by price decreases in Latin America. FX impacts were neutral to revenue.  While overall sales were down 29 per cent, sales of products launched in the last five years were up 4 per cent year-over-year, with growth in all regions.

Sales in all regions declined versus the prior-year period as partners, the distribution channel and growers continued to reduce inventory levels. In North America, revenue was down 34 per cent year-over-year (down 34 per cent organically). EMEA revenue declined 1 per cent (down 4 per cent organically) compared to the third quarter of 2022, as higher pricing and FX tailwinds mostly offset lower volumes. Sales in Asia declined 28 per cent (down 23 per cent organically) as continued destocking across the region negatively impacted volumes. The region reported a 16 per cent growth in products launched in the last five years. In Latin America, revenue was down 33 per cent (down 36 per cent organically) year-over-year driven mainly by lower volumes primarily due to severe destocking in Brazil and, to a lesser extent, drought conditions in Argentina.  Globally, Plant Health revenue was down 20 per cent (down 17 per cent organically) versus the prior year driven by similar, but less severe channel destocking dynamics. 

Third quarter results significantly impacted by lower sales in Latin America channel destocking

Company News, Finance, World

Significant cost mitigation actions were initiated, reducing previously expected operating expenses in the second half by $60 to $70 million.

FMC Corporation provided an update for its expectations on the second quarter and full-year 2023 outlook1. Revenue in the second quarter is now expected to be between $1.00 billion and $1.03 billion. Adjusted EBITDA is expected to be in the range of $185 million to $190 million. The revised guidance is driven by substantially lower-than-expected volumes due to an abrupt and significant reduction in inventory by channel partners, which only became evident towards the end of May and continued through the remainder of the quarter in North America, Latin America and EMEA.

Based on current channel dynamics, the Company is revising its full-year financial outlook, with revenue now expected to be $5.20 billion to $5.40 billion. Adjusted EBITDA for the full year is now expected to be $1.30 billion to $1.40 billion.

“Towards the end of May, we experienced unforeseen and unprecedented volume declines in three out of our four operating regions, as our channel partners rapidly reduced inventory levels,” said Mark Douglas, FMC president and chief executive officer. “Our full-year revenue outlook and adjusted EBITDA have been revised to reflect these channel dynamics and their impact on volumes, as well as the benefit from improved input costs and the significant operating cost mitigation actions we have already implemented.

“Even as we manage through this market contraction and significant inventory reduction by our channel partners, on-the-ground consumption of our products remains strong and at similar levels to last year,” Douglas said.

Information in this news release is preliminary and excludes the outlook on adjusted earnings per share and free cash flow, which will be updated at the second quarter 2023 earnings call. FMC will announce its second quarter 2023 earnings on Wednesday, August 2, 2023, after the stock market close with a webcast conference call on Thursday, August 3, 2023, at 9:00 a.m. ET. 

Significant cost mitigation actions were initiated, reducing