Sales of Enlist seeds and herbicides have helped drive revenue growth for Corteva Agriscience, which reported net sales of nearly $2.8 billion in the third quarter, up 17% from the same period a year ago.
Enlist system product sales, including herbicide-resistant soybean and cotton seed and accompanying herbicides, were up 80% in the first nine months of the year, accounting for $1.1 billion of the company’s $13.63 billion in net sales through the first three quarters of the year. That helped the company keep its net, after-tax operating loss for the quarter at $322 million, or 12 cents per share, about half of what analysts predicted.
In September, Corteva outlined a cost-cutting strategy that includes exiting more than 30 countries and laying off about 5% of its workforce — about 1,000 people.
“While the outlook for ag fundamentals is strong, macroeconomic pressures are expected to continue, including currency and inflation headwinds,” Corteva Chief Executive Officer Chuck Magro said.
Sales of Enlist soybeans — genetically engineered to tolerate 2,4-D, glyphosate and glufosinate — are expected to capture more than half the market in 2023, with 70% of those being Corteva’s own product, the company said.
Corteva’s main competitor in the herbicide-tolerant soybean seed market is Bayer’s Xtend beans, which are tolerant to dicamba and glyphosate.
Magro also said Corteva decided during the third quarter to get out of the “commodity glyphosate” or “straight-goods glyphosate” business, meaning Roundup equivalents sold under different brand names. The company said it expects to take a $300 million revenue hit in 2023 from the decision.
The company will continue selling Enlist Duo, however, which contains glyphosate.
“The cold, hard truth of our glyphosate commodity business is that we don't make a lot of money on it,” Magro said. “So why allocate precious resources to this when we can put it to something else that has much higher margins and moves the needle for farmers?”
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Although it is changing one end of its glyphosate business, the company said it will continue to sell Roundup Ready seeds to farmers. Tim Glenn, executive vice president of Corteva's seed business unit, called the product line “an integral part of our trait offerings today and will continue to be.”
Inflation is expected to ease in 2023, company officials said, but will still be a factor in the pricing of its products next year.
“While we expect cost inflation levels to begin to moderate over the course of 2023, we will see cost headwinds in 2023 in both seed and crop protection, driven by commodity costs as well as raw materials,” said David John Anderson, chief financial officer and executive vice president.
“We're deploying every tool that we possibly can to manage to manage cost and inflation,” Robert King, executive vice president for crop protection, “Our most effective tool is technology,” which he said increases yields, allowing farmers to offset price increases they’re seeing in gas, fuel and fertilizer.
The officials said Corteva expects planted acreage for corn and soybeans to be about 180 million acres next year, with what Anderson called “a slight bias towards corn.” In June, USDA estimated that about 178.2 million acres of the two crops were planted in 2022.
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