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Corteva: 3Q results and Full Year 2024 impacted by Latin America planted area and market dynamicsqrcode

Nov. 7, 2024

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Nov. 7, 2024
  • 3Q YTD performance reflects Seed price / mix gains and ongoing benefits from controllables

  • 3Q results and Full Year 20243 impacted by Latin America planted area and market dynamics

  • Preliminary 2025 outlook3 for strong Operating EBITDA1 growth and margin expansion


Corteva, Inc. (NYSE: CTVA) ("Corteva" or the "Company") reported financial results for the third quarter and nine months ended September 30, 2024.


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2024 YTD Highlights


  • Net sales declined 4% versus prior year. Organic1 sales decreased 2% in the same period.


  • Seed net sales decreased 1% and organic1 sales increased 1%. Price was up 4% led by North America2 with continued execution on the Company's price for value strategy. Volume declines reflect reduced corn planted area in Latin America, as well as unfavorable weather and reduced planted area in EMEA2.


  • Crop Protection net sales decreased 9% and organic1 sales decreased 7%. Volume declines were driven by weather and destocking impacts in EMEA2, as well as just-in-time purchasing behavior in North America2, partially offset by volume growth in Latin America on demand for new products and spinosyns. Price declined 5% primarily due to the market dynamics in Latin America.


  • GAAP income and earnings per share (EPS) from continuing operations were $913 million and $1.29 per share, respectively.


  • Operating EBITDA1 and Operating EPS1 were $2.85 billion, and $2.24 per share, respectively.


  • The Company updated full-year 2024 guidance3 and expects net sales in the range of $17.0 to $17.2 billion.  Operating EBITDA1 is expected to be $3.35 to $3.45 billion.  Operating EPS1 is expected to be $2.50 to $2.60 per share.  Cash provided by operating activities from continuing operations is expected to be $2.1 billion to $2.6 billion.  Free Cash Flow1 is expected to be $1.5 billion to $2.0 billion.  The Company expects it will have repurchased approximately $1 billion shares during 2024.


  • The Company provided a preliminary outlook3 for 2025 and expects net sales in the range of $17.3 to $17.7 billion.  Operating EBITDA1 is expected to be in the range of $3.6 to $4.0 billion.


"Corteva's third quarter results were largely in line with expectations.  We continued to execute effectively and are on track to deliver over $400 million of savings from controllable levers this year.


The Crop Protection business delivered earnings and margin growth in the quarter led by demand for our differentiated technology along with deflation benefits.  Following a strong first half, the Seed business was impacted by lower planted area in Latin America in the quarter.


Despite greater market challenges in the second half of the year, we are still on track for margin expansion in 2024.


Today, we also provided a first look at 2025 with double digit earnings growth expected, driven by factors largely in our control.  We remain committed to delivering advanced technology to our customers and generating consistent, incremental value to our shareholders."


Chuck Magro

Chief Executive Officer


Summary of Third Quarter 2024


For the third quarter ended September 30, 2024, net sales decreased 10% versus the same period last year. Organic1 sales decreased 5%.


Volume was up 3% versus the prior-year period as Crop Protection growth offset lower Seed volumes. Crop Protection volume increased 11% over the prior year driven primarily by Latin America and North America2 on demand for new products and spinosyns, partially offset by residual destocking and unfavorable weather in EMEA2.  Seed volume declined 12% versus prior year due to reduced corn planted area in Argentina.


Price declined 8% versus prior year, reflecting the competitive price environment in Crop Protection, primarily in Latin America.


GAAP income from continuing operations after income taxes was a loss of $519 million in third quarter of 2024 compared to a loss of $315 million in third quarter of 2023. Operating EBITDA1 for the third quarter of 2024 was a loss of $100 million, down 656% compared to prior year, translating into approximately 500 basis points of Operating EBITDA1 margin decline. 


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Seed Summary


Seed net sales were $691 million in the third quarter of 2024, down from $878 million in the third quarter of 2023. The sales decrease reflects a 5% decrease in price, a 12% decline in volume and a 4% unfavorable impact from currency.


Price reflects higher end of season settlements in North America2 and lower volumes were due primarily to reduced corn planted area in Argentina.  Unfavorable currency impacts were led by the Brazilian Real.


Segment operating EBITDA was a loss of $320 million in the third quarter of 2024, down 132% from the third quarter of 2023. Higher commodity and other cost of sales, lower volumes, price declines, and continued investment in R&D more than offset ongoing cost and productivity actions.


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Seed net sales were $7.77 billion for the first nine months of 2024, down from $7.84 billion in the same period of 2023. The sales decrease reflects a 3% decline in volume, a 1% unfavorable portfolio impact and a 1% unfavorable currency impact, partially offset by a 4% increase in price.


The increase in Seed price was driven by strong demand for top technology offerings and operational execution globally, with global corn and soybean prices up 4% and 2%, respectively. Pricing actions more than offset currency impacts in EMEA2. The decline in volume was driven primarily by reduced corn planted area in Argentina, as well as unfavorable weather and reduced planted area in EMEA2.  Unfavorable currency impacts were led by the Turkish Lira and the Brazilian Real.


Segment operating EBITDA was $2.13 billion for the first nine months of 2024, up 8% from the same period of 2023. Price execution and market share gains in North America, reduction of net royalty expense, and ongoing cost and productivity actions more than offset lower volumes, the unfavorable impact of currency, investment in R&D and higher commodity costs. Segment operating EBITDA margin improved by approximately 220 basis points versus the prior-year period.


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Crop Protection Summary


Crop Protection net sales were approximately $1.6 billion in the third quarter of 2024 compared to approximately $1.7 billion in the third quarter of 2023. The sales decline over the prior period reflects a 10% decline in price and a 5% unfavorable impact from currency, partially offset by an 11% increase in volume. 


The increase in volume was driven primarily by Latin America and North America2 on demand for new products, spinosyns, and biologicals, partially offset by residual destocking in EMEA2. The price decline was primarily due to the competitive pricing environment in Latin America.  Unfavorable currency impacts were led by the Brazilian Real.


Segment operating EBITDA was $246 million in the third quarter of 2024, up 34% from the third quarter of 2023. Competitive pricing was more than offset by raw material deflation, productivity savings, and volume growth. Segment operating EBITDA margin improved by 430 basis points versus the prior-year period.


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Crop Protection net sales were approximately $5.2 billion for the first nine months of 2024 compared to approximately $5.7 billion in the same period of 2023. The sales decrease reflects a 2% decrease in volume, a 5% decline in price, and a 3% unfavorable impact from currency. These declines were partially offset by a 1% favorable portfolio impact.


The decrease in volume was primarily due to residual destocking and unfavorable weather impacts in EMEA2, as well as just-in-time purchasing behavior in North America2, partially offset by volume growth in Latin America on demand for new products and spinosyns.


The price decline was primarily due to market dynamics in Latin America.  Unfavorable currency impacts were led by the Brazilian Real and the Turkish Lira. The portfolio impact was driven by the Biologicals acquisitions.


Segment operating EBITDA was $811 million for the first nine months of 2024, down 27% from the same period last year. Pricing pressure, lower volumes, and the unfavorable impact of currency, more than offset productivity savings.  Segment operating EBITDA margin contracted by approximately 375 basis points versus the prior-year period.


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2024 Guidance and 2025 Preliminary Outlook


Commodity prices are relatively steady, despite an anticipated record U.S. corn crop, and farmers continue to prioritize top-tier seed technology, while managing tighter margins.  Against this backdrop, our Seed business has continued to outperform the market, likely gaining market share while improving operational efficiency. Meanwhile, the Latin America market conditions represent a headwind, including a significant reduction in corn planted area in Argentina.


While the global Crop Protection industry volumes have continued to stabilize, the pricing environment remains competitive. Third quarter gains in Operating EBITDA1, including significant benefits from productivity and raw material deflation, reflect the resilience of our Crop Protection business.


As a result, for full-year 2024, Corteva now expects net sales in the range of $17.0 billion to $17.2 billion, a decline of 1% at the mid-point. Operating EBITDA1 is expected to be $3.35 billion to $3.45 billion, growth of 1% at the mid-point. Operating EPS1 is expected to be $2.50 to $2.60 per share, down 5% at the mid-point. Cash provided by operating activities from continuing operations is expected to be $2.1 billion to $2.6 billion. Free Cash Flow1 is expected to be $1.5 billion to $2.0 billion. The Company expects it will have repurchased approximately $1.0 billion shares in 2024.


For full-year 2025, Corteva has a preliminary outlook3 of net sales in the range of $17.3 to $17.7 billion, growth of 2% at the mid-point and operating EBITDA1 in the range of $3.6 to $4.0 billion, growth of 12% at the mid-point.


The Company is not able to reconcile its forward-looking non-GAAP financial measures, except for Free Cash Flow, 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.


Third Quarter Conference Call


The Company will host a live webcast of its third quarter 2024 earnings conference call with investors to discuss its results and outlook tomorrow, November 7, 2024, at 9:00 a.m. ET. The slide presentation that accompanies the conference call is posted on the Company's Investor Events and Presentations page. A replay of the webcast will also be available on the Investor Events and Presentations page.


Corteva to Host Investor Day


The Company will host a live webcast of its Investor Day on November 19, 2024, at 9:00 a.m. ET.  The Company's CEO, Chuck Magro, along with the Company's senior leadership team will provide updates on the company's strategy and position as an Ag technology company, sustainable growth platforms, business operational efficiency, innovation highlights and financial targets through 2027.


1. Organic Sales, Operating EPS, Operating EBITDA, and Free Cash Flow are non-GAAP measures. See page 7 for further discussion. 2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa. 3. The Company does not provide the most comparable GAAP measure on a forward-looking basis. See page 5 for further discussion.


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