Agrow is part of the Business Intelligence Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. Please do not redistribute without permission.

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

FMC to become regionally balanced agchem business

The planned acquisition of a significant part of the former DuPont’s (now part of DowDuPont) crop protection business will see FMC emerge as a purely agrochemical operation with sales divided evenly between the main geographical regions. 

The planned acquisition of a significant part of the former DuPont’s (now part of DowDuPont) crop protection business will see FMC emerge as a purely agrochemical operation with sales divided evenly between the main geographical regions. “The widely held notion that FMC is a Brazilian ag business may finally be put to rest,” the company’s executive vice-president and chief financial officer, Paul Graves, told analysts at the Credit Suisse Basic Materials Conference this week.

FMC agreed to acquire a range of cereal herbicides and the insecticides, chlorantraniliprole (trade-marked as Rynaxypyr), cyantraniliprole (trade-marked as Cyazypyr) and indoxacarb, from DuPont in April, along with most of its global research and development operation. The transaction is expected to be completed on November 1st. Nearly all regulatory approvals for the deal, along with the sale of FMC’s health and nutrition business to DuPont, have been received. The European Commission has provisionally approved the transaction on condition that FMC divest certain product lines. FMC has begun that process and expects to complete it by the end of this year.

The DuPont business is expected to boost FMC’s forecast agrochemical sales for 2017 of some $2,350 million to around $3,800 million. That would represent over 90% of FMC’s total revenues, with the remainder made up of its lithium business. The company plans to create two separate publicly listed agrochemical and lithium businesses in the second half of 2018. “Both ag solutions and lithium are leading positions in technology driven end markets with attractive long-term demand trends,” Mr Graves said. “Both businesses are well positioned to capitalise on growth opportunities well into the future.”

The DuPont acquisition will greatly increase the scale of FMC’s operations in Asia, more than doubling revenues in India and China, Mr Graves pointed out. It will lead to a more balanced business, with about a quarter of sales taking place in each of the four major sales regions. Latin America will account for 28% of the business, with Asia Pacific and Europe/Africa/Middle East each accounting for 25% and North America 22%.

About $1,000 million of increased sales from the acquired business will come from chlorantraniliprole and cyantraniliprole. The active ingredients are patent protected until 2022 and 2024, respectively. Insecticides will make up more than half (51%) of FMC’s sales but the portfolio will be more diversified than before, Mr Graves noted. Herbicides will account for 37% of sales, with a better balance between pre- and post-emergence treatments. Fungicides will make up 8% of sales and other products 4%. The R&D pipeline being acquired from DuPont is skewed towards herbicides and fungicides, which will help to bring greater balance to FMC’s revenues over time, Mr Graves pointed out.

The transaction will bolster FMC’s product offerings in “attractive” crops such as cereals, rice and vegetables, while enhancing its position in soybeans. The company points to a tripling of sales on rice and vegetables, a more than doubling of sales on cereals, while sales on soybeans, tree fruits and vegetables are set to grow by at least 50%. Soybeans will account for some 20% of business, followed by cereals (14%), rice (12%), vegetables (11%), trees, fruits and vines (8%), cotton (7%), sugar cane (7%) and maize (6%). Peas and beans, potatoes and oilseed rape are each put at 2% with other crops making up 9%.

The crop profile will still be heavily weighted towards niche crops, Mr Graves stressed. “We expect to see further growth in these crops as we pursue label expansions, launch new formulations and pre-mixes and as our pipeline of new active ingredients comes to market.”

FMC expects the acquired DuPont business to deliver some $475 million in earnings before interest, tax, depreciation and amortisation in 2018. Underlying growth from the existing and acquired business is expected to add between $55 million and $130 million to that figure after allowing for the impact of the required product divestitures.

 

 

 

 

Advertisement

Topics

What to read next

Advertisement
UsernamePublicRestriction

Register

AG028390

Ask The Analyst

Please fill in the form below to send over your enquiry or check the Ask The Analyst Page to find out more about the service

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel