Corteva cuts annual outlook as Brazilian sales weaken
US agricultural company Corteva lowered its annual earnings outlook after a third-quarter loss and weaker Brazilian demand. Latin American organic sales fell 31 per cent as volumes and prices both declined. Growth in other regions did not offset the regional contraction, while management cited high inventories, farmer cash constraints and interest rates delaying purchases.
Economics & Markets··Midday
Brazil weakness prompts lower guidance
US agricultural company Corteva posted a third-quarter loss and lowered its annual outlook amid weakness in Brazil.[1], [2]
For the quarter ended September, net sales fell from 1,742 million dollars to 1,591 million dollars. Organic sales declined 9 per cent, with volume down 2 per cent and prices down 7 per cent. Latin American organic sales dropped 31 per cent: volume declined 24 per cent and prices fell 7 per cent. Corteva said high distribution inventories, farmer liquidity constraints and high interest rates had delayed Brazilian purchases.[1]
Other regions expand as quarterly earnings fall
In North America, Corteva’s organic sales grew 7 per cent, with volumes up 19 per cent. Europe, the Middle East and Africa recorded 14 per cent organic growth with flat pricing; Asia Pacific sales grew 5 per cent. Continuing operations’ pro forma after-tax result moved from a profit of 60 million dollars to a loss of 54 million dollars. Adjusted pro forma operating earnings before interest, tax, depreciation and amortisation fell from 268 million dollars to 222 million dollars, with the margin narrowing by 140 basis points.[1]
Annual earnings range reflects weaker demand
Management now forecasts annual adjusted operating earnings before interest, tax, depreciation and amortisation of 1.1–1.125 billion dollars and adjusted operating earnings per share of 0.76–0.80 dollars. It said Brazil was weaker than anticipated. The adjusted pro forma quarterly earnings measure incorporates estimates of incremental savings associated with operating independently, which are not yet reflected in pro forma operating earnings. Corteva said actual costs and savings could differ from those assumptions.[1]
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