Corteva(US:CTVA)2023-02-02 18:11Financial Data and Key Metrics Changes - In 2022, organic sales grew by 15% compared to 2021, with global pricing up by 10% and Crop Protection volume increasing by 9% [20][21] - Operating EBITDA for the full year increased by approximately $650 million to $3.2 billion, reflecting strong customer demand and broad-based organic growth [25][49] - Free cash flow for 2022 was approximately $270 million, a significant decrease from over $2 billion in 2021, primarily due to higher working capital balances [27] Business Line Data and Key Metrics Changes - Seed volumes were down due to a reduction in U.S. corn acres and supply constraints for canola, while soybean volumes increased by 7% driven by Enlist penetration [23] - In Latin America, organic sales increased by 23%, with pricing up by 16% and Crop Protection volumes increasing by 10% [24] - New products in Crop Protection delivered over $475 million in sales growth year-over-year, an increase of more than 30% [21][42] Market Data and Key Metrics Changes - U.S. planted area is estimated to be 91 million acres for corn and 89 million acres for soybeans, both showing increases versus 2022 [8] - Global grain and oilseed stocks are tight due to last year's below-trend yields impacted by dry weather and geopolitical factors [7] - The company expects positive market conditions to continue throughout 2023, with a need to rebuild global grains and oilseed inventories over at least two years [9] Company Strategy and Development Direction - The company is focused on a value creation plan aiming for $4.4 billion of EBITDA by 2025, with a margin range of 21% to 23% [14] - Strategic actions include portfolio simplification, royalty neutrality, product mix, and operational improvements [5] - The company plans to increase investment in R&D to deliver more differentiated and sustainable solutions [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for 2023, expecting 5% sales growth and continued margin expansion despite cost inflation and currency headwinds [16][57] - The company anticipates a strong demand for differentiated technology and expects to benefit from ongoing capacity expansions [60][64] - Management noted that farm income is expected to remain strong, supporting demand for corn and soybean oil [17] Other Important Information - The company announced its intent to acquire Symborg and Stoller, which are expected to close in the first half of 2023, reinforcing its commitment to sustainable agricultural tools [15] - The guidance for 2023 includes a projected operating EPS range of $2.70 to $2.90 per share, reflecting earnings growth and a lower average share count [30] Q&A Session Summary Question: Insights on the value creation program and its acceleration - Management indicated that the company is ahead of the value creation plan, achieving 200 basis points of margin improvement in 2022, exceeding initial expectations [38] Question: Clarification on the low end of 2023 guidance - The guidance reflects headwinds from portfolio changes and higher interest rates, with a focus on currency impacts and inflation dynamics [39][70] Question: Free cash flow assumptions for 2023 - The company expects working capital dynamics to contribute positively to cash flow, despite higher cash taxes and interest expenses [74] Question: Crop Protection volumes and fungicide demand - Management explained that weak fungicide demand in Latin America was due to drought conditions affecting expected growth [95] Question: Commentary on Crop Protection margins and pricing strategies - The company highlighted strong demand for differentiated products and effective cost management strategies to offset inflation [100][114]