NTR - FMC falls to 21-month low after slashing guidance weighing on ag stocks

2023-07-10 12:32:06 ET

FMC Corp. ( NYSE: FMC ) -11.3% in Monday's trading to its lowest level since October 2021 after slashing Q2 and full-year guidance , after already guiding Q2 earnings and revenues below analyst estimates when it reported Q1 results .

Agricultural peers also trade lower in reaction to reduced guidance, including Corteva ( CTVA ) -5.3% , Nutrien ( NTR ) -2.3% , Mosaic ( MOS ) -2.1% , CF Industries ( CF ) -1.8% , Intrepid Potash ( IPI ) -1.8% ; many of these names have posted strong gains recently , with the strike at the Port of Vancouver threatening to disrupt supply chain dynamics of various goods including potash fertilizer.

FMC ( FMC ) now sees a ~30% reduction to its previous Q2 revenue guidance, citing substantially lower than expected volumes due to an abrupt and significant reduction in inventory by channel partners that only became evident near the end of May and continued through the rest of the quarter in three out of its four operating regions.

Credit Suisse analysts cut their full-year profit estimate for the company by 14% to $6.57/share to reflect ongoing inventory destocking.

Fertilizer company earnings can be volatile, as the prices they pay for chemical inputs vary Q/Q, it is not always clear how easily they can pass price changes on to end customers, and demand can vary as weather and droughts play an important role.

More on FMC Corp.:

• Financial and valuation comparison to sector peers
• Analysis: FMC Corp.: Margin Expansion Supports The Buy Case
• Stock price return: Down 22.5% YTD, down 7.5% in the past 12 months

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