FMC Misses on Earnings and Revenues

Zacks

Chemical company FMC Corporation’s (FMC) consolidated adjusted earnings for third-quarter 2013 were 82 cents per share, missing the Zacks Consensus Estimate by a penny but exceeding the year-ago adjusted earnings of 77 cents. Adjusted earnings exclude charges (including those related to restructuring and acquisitions) of $92.3 million.

Consolidated profit, as reported, slid 80% year over year to $17.9 million (or 13 cents per share) from $90 million (or 65 cents a share), hurt by sizable charges.

Results from FMC Corp.’s Peroxygens division have been classified as discontinued operations. The company plans to announce the results of the divestiture process of the division by end of this year.  

Revenues rose roughly 16% year over year to $957.4 million in the reported quarter on strength in the company’s core agricultural solutions business. It was, however, trailed the Zacks Consensus Estimate of $966 million.

Segment Results

Revenues from the Agricultural Solutions division jumped 25% year over year to $530.2 million in the reported quarter on the heels of strong demand in Latin America, buoyed by strong start of growing season in the region. Strong sales in Latin America offset lower demand in North America due to pest pressures. Segment profit was up 13% year over year, driven by higher volumes.

Health and Nutrition segment’s sales rose 10% to $190.4 million in the quarter on higher volumes, better pricing and contributions of Epax acquisition. Segment profit edged up 2% as volume gains in food markets was partly offset by lower pharmaceutical demand and higher raw material costs.

Revenues from the Minerals unit went up 6% to $237.8 million. Profit slipped 20% year over year to $35.4 million as a decline in export pricing and higher costs more than offset higher global soda ash volumes. FMC Corp. is implementing process changes at its Lithium operation in Argentina and expects to achieve improved production rates in the fourth quarter.

Balance Sheet

FMC Corp. ended the quarter with cash and cash equivalents of $109.6 million, up 30% year over year. Total debt nearly doubled year over year to $1,714.2 million.

Outlook

For full-year 2013, FMC Corp. expects adjusted earnings to be in the band of $3.74 to $3.84 per share, representing a 12% year over year rise at midpoint of the range. The company expects growth across Agricultural Solutions and Health and Nutrition divisions to more than offset weakness in its Minerals segment. For the fourth quarter, FMC Corp. forecast adjusted earnings in the range of 90 cents to $1.00 per share.

The Agricultural segment is expected to make a strong finish to 2013 driven by favorable market conditions in Latin America. The company sees continued growth and market penetration in Latin American in the fourth quarter.

FMC Corp. expects sales and earnings from the Health and Nutrition segment to show strong growth in the fourth quarter on sustained momentum in core food market and higher contribution from Epax. Results from the Minerals unit are expected to improve sequentially in the fourth quarter on higher export pricing and successful implementation of lithium operational improvements.  

FMC Corp. is a leading diversified chemical company that serves agricultural, industrial, environmental and consumer markets across the globe. It is a leading maker of Lithium-based materials for primary and rechargeable batteries used in laptops, cellular phones and electric cars.

FMC Corp. currently retains a short-term Zacks Rank #2 (Buy).

Other companies in the chemical industry with favorable Zacks Rank are E. I. du Pont de Nemours and Company (DD), Air Products & Chemicals Inc. (APD) and PPG Industries Inc. (PPG). All of them carry a Zacks Rank #2 (Buy).

Read the Full Research Report on PPG
Read the Full Research Report on DD
Read the Full Research Report on APD
Read the Full Research Report on FMC


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