Corteva posts earnings decline as agscience spinoff raises guidance

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Wilmington-based Corteva, Inc. reported lower earnings in its early days as a standalone company. The company did raise earnings guidance.

Corteva’s stock price is up a couple of dollars a share from the date of its spinoff. Its stock performance will be closely watched as it was touted as the key reason for the three-company spinoff of DowDuPont.

Corteva combined Dow and DuPont agriscience businesses.

Commenting on the company’s second-quarter performance, CEO Jim Collins said, “On June 1, 2019, we completed an important separation milestone, becoming a global, standalone, pure-play agriculture company – taking this step during an extraordinary period in our industry. In our initial quarter as a standalone company, we delivered technology-driven, organic growth in nearly all regions despite continued pressure from the unprecedented weather events that challenged near-term market conditions in North America.”

Collins continued, “We remain committed to executing on our priorities and adjusting our actions focused on delivering continuous value for our customers and shareholders. We are delivering on our cost synergy targets, with an additional $200 million realized in the first half, and we continue to demonstrate our commitment to customer-centered innovation through the acceleration of new product launches that are helping to address real-time challenges facing growers around the world.”

Weather-related planting delays and lower-than-expected planted area in corn, soybeans, and canola pressured sales in North America, and together with an unfavorable currency impact, drove a decrease in net sales of 3percent in the second quarter 2019 versus the same period last year.

Local price declined 1 percent in the second quarter 2019 versus the year-ago period, with price gains elsewhere more than offset by decreases in North America due to higher replant in corn and competitive pricing pressure on soybeans.

Volumes were essentially flat versus the prior-year period due to 5 percent lower volumes in North America on weather-related impacts, offset by performance across elsewhere on volume growth of 14percent led by Latin America on pre-season early demand..

Generally accepted accounting principles net income from continuing operations totaled $500 million in the second quarter of 2019, down 50percent versus the same quarter last year on a pro forma basis.

Operating earnings before interest, taxes, depreciation and amoritizaition for the second quarter 2019 was $1.5billion, a decrease of 6percent compared to the same period last year on a pro forma basis. Improvement in Crop Protection segment operating EBITDA from new products and cost savings from synergies were more than offset by currency impacts, lower seed results due to competitive pricing pressure in soybeans, higher replant in corn and lower seed margins.

Net sales for the first half of 2019 were $9billion, down 6 percent compared to the prior-year period.

Pro forma net income from continuing operations totaled $0.6 billion for the first half of 2019, down 48percent versus the same period last year. Pro forma operating EBITDAfor the first half of 2019 was $2billion, down 13 percent as compared to the prior-year period. Declines in Crop Protection and Seed were primarily due to lower sales from the impact of weather delays and reduced planted area in North America, competitive pricing pressure, lower margins and currency offsetting cost savings from synergies.

Corteva revised its full year guidance of pro forma operating EBITDAto a range of $1.9 billion to $2.05 billion. Net sales for the full year are expected to be down about 3 percent.

Commenting on the Company’s outlook, Collins said, “Despite the first-half challenges, we continue to see strength across our global business. Looking ahead to the second-half, we expect ongoing, solid adoption for high-demand products and anticipate continued ramp-up of recent product launches to continue driving high-value sales globally. We remain focused on delivering cost-synergy commitments and expect to see ongoing improvements from productivity actions in the second half. Overall, we remain firm in executing against our plans, capitalizing on the strength of our industry-leading product portfolio and business model in the face of a historic external environment.”

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