Mixed 2Q for FMC Corp.
Chemical company FMC Corporation’s (FMC) adjusted earnings (excluding one-time items) came in at 92 cents per share in the second quarter of 2012 compared with 77 cents in the year-ago quarter. The results exceeded the Zacks Consensus Estimate of 90 cents.
After including one-time expenses, the company reported earnings of 76 cents per share, up 2.7% from 74 cents in the year ago quarter.
Sales jumped 11.5% year over year to $905.2 million in the quarter, but missed the Zacks Consensus Estimate of $906 million. Sales were aided by strong growth of agricultural Products and higher demand in Latin America.
Segment Performance
Agricultural Products –Revenues rose 19% year over year to $393.6 million, driven by higher demand in Latin America and North America. Earnings jumped 18% to $111.2 million on the back of strong volume growth, partially offset by higher spending on targeted growth initiatives.
Specialty Chemicals – Revenues increased 3% to $235.4 million in the quarter. Higher selling prices were offset by unfavorable currency impact (due to the weakening euro) in the BioPolymer business. Earnings fell 6% to $52.7 million, due to increased raw material costs, continuing impacts of operational issues in Lithium that started in the first quarter and increased investment to support growth initiatives in BioPolymer.
Industrial Chemicals –Revenues increased 9% to $277.1 million on higher selling prices and higher volumes. Earnings for the segment increased 18% to $42.8 million due to favorable mix shift in Peroxygens toward specialties markets.
Financial Performance
The company’s cash and cash equivalents stood at $75.5 million as of June 30, 2012, compared with $158.9 million as of December 31, 2011. Long-term debt was $810 million as of June 30, 2012, compared with $779.1 million as of December 31, 2011.
Acquisition
FMC Corporation, on August 1, 2012, signed a deal with Pectine Italia S.p.A., an Italy-based manufacturer of pectin for the food ingredients market,to acquire its assets for undisclosed terms. Pectine Italia produces pectin, a gelling and thickening agent used widely in many foods. The deal will not only expand FMC Corporation’s global footprint, but will also offer a strategic advantage due to the company’s entry into the pectin market, thereby increasing its portfolio of innovative food ingredients.
Upon completion of the acquisition, Pectine Italia’s pectin business will become part of FMC BioPolymer, a business unit within FMC Corporation’s Specialty Chemicals division. The deal is expected to be completed by the third quarter of 2012.
Outlook
For the third quarter of 2012, FMC Corporation expects adjusted earnings to be in the range of 70 cents to 80 cents per share. For 2012, the company expects adjusted earnings to be in the range of $3.42 to $3.52 per share
FMC Corporation is one of the prominent players in the agrochemical space along with E. I. du Pont de Nemours and Company (DD), The Dow Chemical Company (DOW) and Monsanto Company (MON). Currently, FMC Corporation maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating.
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