Corteva(CTVA)2021-06-09 20:52Summary of Corteva, Inc. Conference Call Company Overview - Company: Corteva, Inc. (NYSE:CTVA) - Event: Deutsche Bank's 12th Annual Global Basic Materials Conference - Date: June 9, 2021 - Participants: Jim Collins (CEO), Dave Begleiter (Deutsche Bank) Key Industry Insights - Agricultural Fundamentals: Strong fundamentals in agriculture with corn and soybean prices reaching near seven-year highs [3][4] - Grain Supply Outlook: Difficulties in rebuilding global supplies of grains and oilseeds due to drought conditions in Latin America and strong demand, particularly from China [7][8] - Multi-Year Cycle: Expectation of a multi-year cycle of stronger grain prices, driven by demand and supply constraints [8] Company Performance and Strategy - Momentum and Execution: Corteva finished 2020 strong and carried that momentum into 2021, focusing on execution amidst global challenges [4][5] - Strategic Focus: Key components of Corteva's strategy include top-line growth in Crop Protection and seeds, margin enhancement, and disciplined capital allocation [5][6] - Market Positioning: Confident in creating shareholder value through strategic execution and capitalizing on strong agricultural market fundamentals [7] Pricing and Market Dynamics - Price Projections: Anticipated easing of corn and soybean prices in 2022 and 2023, but still at constructive levels that support net farm income [10] - Farmer Purchasing Behavior: Higher prices are expected to lead farmers to invest more in seeds and crop protection applications [12][13] Product Development and Innovations - Enlist System: Strong momentum in the Enlist system with expectations of significant market penetration [21][22] - Qrome Product: Projected sales of 1.1 billion [26][27] - Brevant Brand: Successful launch with goals to achieve 20% market share, representing a 1.3 billion in sales from the pipeline [43] - Insect and Disease Pressure: Normal year for insect pressure, with strong performance in soybean herbicides due to glyphosate shortages [45] Cost Management and Inflation - Inflation Pressures: Rising costs in raw materials, particularly glyphosate, leading to price adjustments [47][48] - Productivity Actions: Ongoing efforts to offset cost headwinds through productivity improvements and pricing strategies [50][52] Financial Outlook - EBITDA Guidance: Confidence in maintaining EBITDA guidance despite cost pressures [52] - Pension Liability: US pension plan was 84% funded as of the end of 2020, with no required contributions expected [64][65] M&A Strategy - Growth Strategy: Focus on opportunistic M&A to enhance product offerings and geographic footprint, particularly in biologicals and digital platforms [62][63] Conclusion - Overall Sentiment: Corteva is well-positioned to navigate current market dynamics, with a strong focus on execution, innovation, and strategic growth initiatives [7][8][9]