Corteva Agriscience leaders expressed optimism about the company’s financial position, and the strength of the ag economy as a whole, in a call Thursday where they reported revenue and earnings numbers that exceeded analysts’ estimates.
Wall Street seemed to share that optimism, as the news pushed the stock price up sharply Thursday.
Both Corteva’s revenue for the fourth quarter, at $3.71 billion, and its earnings per share of 15 cents exceeded analysts’ estimates. Operating EBITDA – earnings before interest, taxes, depreciation, and amortization – grew 5% in 2023 to $3.38 billion, and net sales grew 1% to $17.23 billion.
“We foresee another year of strong cash flow generation and plan to execute a billion dollars in share repurchases over the course of 2024,” Corteva CEO Chuck Magro told analysts on a webcast Thursday.
Magro said U.S. farm income “remains above the historical average, though down from its 2022 peak. What has not changed is farmer demand for breakthrough innovation and technology. Including seeds that maximize yields, which in turn boosts farmer revenue.”
The company expects net sales in 2024 to be in the range of $17.4 billion to $17.7 billion, which would be an improvement from the $17.23 billion reported Thursday.
Operating EBITDA is expected to be between $3.5 billion to $3.7 billion, also an increase. Operating earnings per share are forecast to be between $2.70 and $2.90. Corteva reported EPS of $2.69 for 2023.
The company said it expected market penetration of its Enlist E3 soybean seeds to increase to 60% in 2024, further eclipsing Bayer’s Xtendimax as the dominant seed on the market. Sales of Enlist reached $1.7 billion in 2023.
Magro and other company officials also emphasized growth in its biologicals business, aided by its acquisition of Stoller and Symborg in March 2023.
“New crop protection product volume is expected to be up high single digits, driving incremental organic revenue,” said Chief Financial Officer Dave Anderson. “Additionally, we’ll benefit from the spinsoyns capacity expansion, as we expect high single-digit growth from the spinosyns franchise in 2024.”
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The crop protection industry, however, “is working to rebalance after the significant destocking in 2023, [but] we expect the industry to modestly improve as the imbalance between product going into the channel and on-farm consumption returns to alignment,” Magro said.
“Once we get into 2025, we expect the imbalance between product going into the channel versus what is being applied on the farm to be back in sync,” he said.
“As we look ahead, overall ag fundamentals remain constructive,” Magro said. “Large global crop production is being met with record demand for grain, oilseeds and biofuels. In North America, corn production and yield for the '23-'24 crop year is expected to hit a new record despite the productivity challenges that farmers must face related to weather and disease – a testament to the importance of ag technology.”
Brazil, however, “could be the exception, with weather influencing crop stress and planting decisions,” he said.
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