FMC Corp (FMC) Lowers FY15 Earnings View, to Cut Jobs
FMC Corp. FMC has reduced its adjusted earnings guidance for full-year 2015 factoring in a rapid devaluation of the Brazilian real. The chemical maker also announced its plans to cut costs through headcount reduction. The company’s shares slid nearly 17% in extended trading yesterday on the announcement.
FMC Corp. said that a slump in the value of the Brazilian real, which depreciated more than 50% versus the U.S. dollar in the last 12 months, has created significant headwinds in the second half of 2015, hurting earnings in its Agricultural Solutions segment. As a result, the company has reduced its third-quarter and full-year outlook for the division. It now expects third-quarter segment earnings of $59 million, down from its prior view of $105 million to $125 million.
The company has lowered its adjusted earnings outlook for 2015 to a band of $2.35 to $2.45 per share from its earlier view of $3.00 to $3.30 per share. For the third quarter, it sees adjusted earnings of 38 cents per share. The company will report third-quarter results on Nov 2.
FMC Corp. expects the real devaluation to reduce earnings of its Agricultural Solutions division by $200 million to $240 million in the second half. This will be, in part, neutralized by the company’s efforts to increase prices to offset the currency impact.
FMC Corp. also said that it will cut corporate costs through layoffs, reduced discretionary spending and global procurement initiatives that are expected to be mostly complete by 2015 end. The company plans to eliminate 800 to 850 jobs. It expects to achieve annual cost savings of $140 million to $160 million by mid 2017, up from $90 million expected earlier.
The company will reorganize its operations in Brazil to align it with near-term market conditions. The portfolio rationalization will reduce revenues in Brazil by $250 million year over year in 2015. The rationalization will allow FMC Corp. to further reduce the region's operating costs and increase its potential to deliver higher future earnings and return on capital.
FMC Corp. is a Zacks Rank #5 (Strong Sell) stock.
Some better-ranked companies in the diversified chemical space are Koppers Holdings Inc. KOP, Arkema S.A. ARKAY and Celanese Corporation CE. While Koppers sports a Zacks Rank #1 (Strong Buy), both Arkema and Celanese carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CELANESE CP-A (CE): Free Stock Analysis Report
FMC CORP (FMC): Free Stock Analysis Report
KOPPERS HOLDNGS (KOP): Free Stock Analysis Report
ARKEMA-ADR (ARKAY): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
