FMC agchem sales down 22% in Q1 2016

First quarter segment revenue for FMC Agricultural Solutions was $546 million, an increase of 39 percent versus reported revenue for the prior-year quarter. Segment earnings were $82 million, which was flat versus prior-year reported results. On a pro forma basis, first quarter segment revenue and earnings each declined 22 percent compared to the same period in 2015, as lower sales volume in North America and Brazil, plus foreign currency swings, more than offset higher prices and the benefits of revenue synergies and new product introductions. Lower third-party product volumes contributed 4 percent to the revenue headwind in the quarter. At the segment earnings level, price increases in Brazil more than offset the year-over-year impact of the weaker real, but the strength of the U.S. dollar resulted in headwinds in Europe, Asia, and other parts of Latin America. Agricultural Solutions segment operating margins were flat year-over-year, on a pro forma basis.

 
For 2016, full-year segment revenue is expected to be in the range of $2.3 billion to $2.5 billion and full-year segment earnings are expected to be in the range of $380 million to $420 million, with second quarter segment earnings in the range of $90 million to $110 million. 

Pierre Brondeau, FMC president, CEO and chairman said: "In Agricultural Solutions, we continue to see the benefits of the Cheminova acquisition. In 2014, more than three quarters of its revenue was generated in North and South America. Cheminova significantly increased the size of Ag Solutions operations in Europe and Asia, bringing greater scale and market access to Ag Solutions operations across all regions. The increased global scale of our operations, combined with actions we have taken in North and South America, will bring greater regional balance to Ag Solutions, align our operations with the global crop protection chemical market and limit Ag Solutions reliance on any one region or market to drive performance. For example, in 2014, almost 40 percent of Ag Solutions revenue was generated in Brazil alone. In 2016, we expect Brazil to account for less than 20 percent of segment revenue, and only 15 percent of total company revenue.”

“Across the global Ag market, conditions in the Americas remain the most challenging. With greater scale and regional balance, FMC is able to better manage our business in the Americas to address market conditions. Specifically, we restructured our operations in Brazil to align the size of our business with market conditions, and rationalized our product offering to increase our focus on higher margin proprietary technology platforms and differentiated products. While these actions reduced our revenues in Brazil, they improved the quality of our operations and enhanced the potential to deliver higher earnings and return on capital. In North America, we are supporting customer inventory drawdowns to more closely match our sales with underlying grower demand, an important step to further strengthen FMC’s position from which to protect price and terms. ”

“Cheminova has also expanded our product portfolio and technology pipeline and provided the opportunity to realize meaningful cost savings. We are already seeing the benefits of our expanded product portfolio in North America and Europe and the integration of Cheminova is progressing well. We remain on track to deliver the full run-rate cost savings of $140 to $160 million by the middle of 2017.”