FMC Shares Plunge Over 11% in 2023 After Cutting Revenue Forecast Due to Severe Weather and Inventory Drops
FMC Corporation slashed its 2023 revenue outlook amid sharp inventory reductions and adverse weather impacting global agricultural yields, causing shares to fall significantly.
Essential Highlights
- FMC stock fell more than 11% following a lowered quarterly and annual revenue forecast for 2023.
- The Philadelphia-based agricultural sciences firm attributed the revision to sudden, substantial inventory cuts by channel partners.
- Extreme weather conditions across key farming regions in Africa, Australia, Latin America, and Southeast Asia are expected to reduce crop yields this year.
On Monday, FMC Corporation experienced a steep decline in its shares, dropping over 11% and leading losses on the S&P 500 index after revising down its revenue projections for Q2 and the full year 2023. The company cited unexpected inventory and sales decreases driven by severe weather disruptions as the primary cause.
FMC highlighted an "abrupt and significant reduction in inventory by channel partners" across vital markets including Latin America, EMEA, and North America. These unprecedented supply chain volume declines became apparent toward the end of May, prompting the outlook adjustment.
Despite the challenges, FMC noted that actual usage of its products on the ground remains consistent with last year's levels. However, major agricultural zones in Africa, Australia, Latin America, and Southeast Asia are forecasted to produce lower yields due to extreme climate events.
Financially, FMC revised its Q2 2023 revenue guidance to a range of $1.00 billion to $1.03 billion, down from the previous estimate of $1.42 billion to $1.48 billion. For the full year, the company now anticipates revenues between $5.2 billion and $5.4 billion, a significant decrease from the prior forecast of $6.08 billion to $6.22 billion.
In Q1 2023, FMC posted steady revenues of $1.34 billion and achieved a 2% year-over-year increase in EBITDA, reaching $362 million.
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