Corteva delivers strong Q4 and full-year 2021 results led by broad-based execution, provides 2022 guidance

Corteva, Inc. reported financial results for the fourth quarter and 12 months ended December 31, 2021.

Summary of Fourth Quarter 2021 

For the fourth quarter ended December 31, 2021, net sales increased 8% versus the same period last year. Organic1 sales rose 9%. Sales were led by double-digit gains in Latin America. 

Volume grew 1% versus the prior-year period, with gains in both segments led by continued demand for our new and differentiated technologies, coupled with strong customer demand in Latin America. Volume gains were partially offset by the strategic decision to phase out select low-margin products, and supply constraints in North America Crop Protection. 

Price increased 8% versus prior year. Higher prices in all regions helped to offset the impact of ongoing raw material cost inflation and other market-driven headwinds.

Crop Protection net sales increased 6% for the quarter, primarily due to price execution.

Seed net sales rose 12% for the period, primarily driven by double-digit gains in Latin America on strong demand for corn and price execution across all regions.

GAAP income from continuing operations after income taxes was $155 million for the fourth quarter of 2021. Operating EBITDA for the period was $262 million, up 11% compared to prior year.

Crop Protection Summary

Crop Protection net sales were approximately $2.1 billion in the fourth quarter of 2021 compared to approximately $2.0 billion in the fourth quarter of 2020. The sales increase was driven by a 6% increase in price and a 1% increase in volume. These gains were partially offset by a 1% unfavorable portfolio impact.

The price increase was driven by gains in North America, including pricing for higher raw material and logistical costs. The increase in volume was driven by continued penetration of new and differentiated products, coupled with strong customer demand in Latin America. These volume gains were partially offset by an approximate $75 million impact from the decision to phase out select low-margin products. The Company also encountered supply constraints in North America, resulting in an approximate $70 million volume impact in the quarter.

The portfolio impact was driven by a divestiture in Asia Pacific.

Segment Operating EBITDA was $305 million in the fourth quarter of 2021, down 7% from the fourth quarter of 2020. Continued price execution, productivity actions and volume gains from new products were more than offset by higher input costs, including raw material costs, volume impacts from supply constraints and higher variable compensation costs.

Crop Protection net sales were approximately $7.3 billion for full-year 2021 compared to approximately $6.5 billion in the prior year. The increase was due to a 6% increase in volume, a 5% increase in price and a 2% favorable impact from currency, partially offset by a 1% unfavorable portfolio impact.

Volume gains were led by continued penetration of new products globally, with combined sales of more than $1.4 billion in 2021 – up nearly $450 million compared to the prior-year period – led by Enlist™ and Arylex™ herbicides and Isoclast™ insecticide. These volume gains were partially offset by an approximate $275 million impact from our decision to phase out select low-margin products.

The increase in price was primarily driven by gains in North America and Latin America, including pricing for higher raw material and logistical costs. Favorable currency impacts were primarily from the Euro. The portfolio impact was driven by a divestiture in Asia Pacific.

Segment Operating EBITDA was $1.2 billion in 2021, up 20% from 2020. Pricing execution, continued penetration of new products, ongoing cost and productivity actions and a favorable impact from currency more than offset higher input costs, including raw material and logistical costs, and higher variable compensation costs. Segment Operating EBITDA margin improved by more than 100 basis points versus the prior-year period.

Seed Summary

Seed net sales were $1.4 billion in the fourth quarter of 2021, up from $1.2 billion in the fourth quarter of 2020. The increase was due to a 10% increase in price and a 2% increase in volume.

The increase in price was led by strong execution in Latin America and North America. Volume gains were driven by strong demand for corn in Latin America, led by Brazil.

Segment Operating EBITDA was $(11) million in the fourth quarter of 2021, an improvement of 77% from the fourth quarter of 2020. Continued price execution, ongoing cost and productivity actions, higher volumes and lower royalties more than offset higher input costs from higher commodity costs, higher variable compensation costs and a loss from the remeasurement of an equity investment.

Seed net sales were approximately $8.4 billion in 2021, up from approximately $7.8 billion in the year-ago period. The increase was due to a 4% increase in price and a 4% increase in volume.

Local price gains were driven by strong adoption of new Seed technology, including price execution in Latin America and EMEA, with corn price up 5% globally. These gains were partially offset by competitive pricing pressure in North America soybeans, where price was down 2%. The increase in volume was driven by strong demand for corn in Brazil, coupled with higher soybean and corn sales in North America.

Segment Operating EBITDA was $1.5 billion in 2021, up 25% from the prior year. Continued price execution, volume gains, ongoing cost and productivity actions, lower royalties and lower bad debt expense more than offset higher input costs, higher freight and warehousing costs and higher variable compensation costs. Segment Operating EBITDA margin improved by more than 240 basis points versus the prior-year period.

2022 Outlook 

The Company provided guidance4 for the full-year 2022. Corteva expects net sales in the range of $16.7 billion to $17.0 billion, which at the mid-point represents expected net sales growth of 8% for the year and organic1 sales growth of 11% for the year. Operating EBITDA is expected to be in the range of $2.8 billion to $3.0 billion and operating EPS range is expected to be between $2.30 and $2.50 per share. The Company is not able to reconcile its forward-looking non-GAAP financial measures to its most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of its control, such as Significant Items, without unreasonable effort.