FMC beats estimates on volume gains

20:53 PM | May 5, 2020 | Rebecca Coons

FMC reports first-quarter net income of $206.2 million, down 5.1% year-on-year (YOY). Adjusted earnings of $1.84/share was 7% higher year-on-year and beat the analysts’ consensus estimate of $1.78/share, as reported by Refinitiv (New York). Sales increased 5% YOY, to $1.25 billion, on higher volumes and prices, partially offset by currency headwinds. 

Pierre Brondeau, CEO and chairman of FMC, says the company “effectively navigated” the challenges presented by the coronavirus disease 2019 (COVID-19) pandemic. “Our global operations, supply chain and commercial teams worked diligently to ensure customers had timely access to critical crop protection products through the quarter."

Latin America sales grew 26% YOY, driven by “robust volume growth broadly across the region.” Each product segment grew at least 20% in Latin America, with herbicides growing the fastest, due to sugarcane replanting in Brazil. In North America, sales increased 3% YOY, driven by demand for Rynaxypyr insect control and new products, including pre-emergent herbicide Authority Edge. Sales in EMEA grew 1% YOY due to very strong demand for fungicides and solid growth in herbicides, which were partially offset by product rationalizations. In Asia, revenue decreased 3% YOY. The decline was driven primarily by foreign currency headwinds and product rationalizations, which were partially offset by double-digit growth in India and Pakistan.

Adjusted EBITDA was $357 million, up 4% YOY, driven primarily by volume gains in Latin America and EMEA, price increases in all regions, and new products. 

"Despite forecasting solid organic growth, we believe the second quarter will present the most challenging and uncertain conditions related to COVID-19 and currencies. FX will be a strong headwind at a time of year when price increases are the most difficult to implement," Brondeau says. "Cost-savings measures implemented in March will partially offset these headwinds."

The company expects full-year sales of $4.65–$4.85 billion, up 3% YOY at the midpoint. Adjusted earnings are expected to be in the range of $6.05–6.70/share, 5% higher YOY and in line with analysts’ estimate of $6.34/share.  Full-year adjusted EBITDA is now expected to be in the range of $1.23–1.34 billion, representing 5% YOY growth at the midpoint. COVID-related and currency headwinds–partially offset by cost savings and strong price increases–could reduce EBITDA by a range of $0–70 million compared to prior guidance.