FMC Corp. Lowers Q1 View on Weather Headwind

Zacks

Chemical company FMC Corporation (FMC) has snipped its first-quarter 2014 outlook for its core agriculture business as cold weather in North America is expected to lead to later-than-usual demand pattern for its crop protection products.  

The Philadelphia-based company now sees operating profit for its Agricultural Solutions segment to be down mid-20% year over year in the first quarter. Earlier, it projected profit from the division to be up in the low-teens clip expecting a solid finish in Latin America and strong early season demand in North America.

However, FMC Corp. backed its full-year 2014 guidance for the Agricultural Solutions division and continues to expect segment revenues and operating profit to increase in mid-teens clip over 2013.

FMC Corp. saw a 38% year-over-year surge in revenues in the Agricultural Solutions division in fourth-quarter 2013, buoyed by continued market penetration in Brazilian soybean applications, new products and strong demand due to higher cotton acreage. Early season demand in North America also led to increased sales volumes for pre-emergent herbicides and insecticides.

FMC Corp. is well placed to meet or exceed its targets for “Vision 2015”, a road map for future. Recent acquisitions and development agreements are adding strength to its agricultural business. The company expects a 15% year-over-year rise in earnings per share in 2014 (based on the midpoint of its guidance range).

FMC Corp. expects above-market rate growth to continue for its agricultural business this year, driven by favorable market conditions, continued market share gains and new product introductions. Moreover, the Omega-3 product line and expanding portfolio are expected to drive earnings in the company's health and nutrition franchise.

However, FMC Corp. is exposed to significant currency headwind. In addition, its Minerals unit, a more cyclical business, remains somewhat weak with continued double-digit decline in profits. A soft soda ash export pricing environment and high costs are affecting the segment’s profitability.

FMC Corp. is a Zacks Rank #3 (Hold) stock.

Other companies in the chemical industry with a favorable Zacks Rank are The Dow Chemical Company (DOW), LyondellBasell Industries NV (LYB) and PPG Industries Inc. (PPG), all with a Zacks Rank #2 (Buy).

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