Corteva(CTVA)2024-11-07 17:46Financial Data and Key Metrics Changes - Corteva reported organic sales down 5% year-over-year in Q3 2024, with crop protection up 1% and seed down 17% [20] - Operating EBITDA for the year-to-date is approximately 17 billion to 175 million in controllable benefits year-to-date, despite a 12% decline in seed volumes primarily due to reduced corn area in Argentina [8][20] - Crop protection volumes were up 11%, led by Latin America and North America, with new crop protection products seeing volume increases of over 20% [21][10] - Year-to-date, seed organic sales were up 1% with pricing up 4%, while crop protection organic sales were down 7% with pricing down 5% [22] Market Data and Key Metrics Changes - The agricultural markets remain mixed, with record demand for food and fuel, but competitive market dynamics are expected to continue into next year [11] - The crop protection market has turned a corner in every major market except Brazil, where conditions remain challenging [11] - In 2025, total area planted by farmers in the U.S. is expected to be nearly flat year-over-year, with Brazil showing a mid-single-digit increase for corn and soybeans [15] Company Strategy and Development Direction - Corteva is committed to focusing on differentiated and new technologies that warrant a premium in the market, with over 150 crop protection registration approvals year-to-date [10] - The company anticipates a continuation of record demand for grain, oilseeds, meat, and biofuels, with farmers prioritizing top-tier technologies to maximize yields [14] - The strategic shift from being a technology buyer to a technology seller is seen as a long-term growth opportunity for Corteva [56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the stabilization of the crop protection industry, particularly in North America, while acknowledging ongoing challenges in Brazil [86] - The company expects to achieve double-digit earnings growth and margin expansion in 2025, driven by controllable factors and new product introductions [84] - Management highlighted the importance of the upcoming Investor Day for providing further insights into growth strategies and market conditions [40] Other Important Information - Corteva is on track to deliver 2 billion in free cash flow for the year, along with 1 billion in share repurchases [38] - A new Executive Vice President for the seed business will be appointed, with Judd O'Connor succeeding Tim Glenn [43][44] Q&A Session Summary Question: Breakdown of 150 million inflation and other costs - David Johnson indicated that about two-thirds to 75% of the 600 million driven by cost management and productivity, with deflation accounting for about half of that [54][55] Question: Impact of deferred seed sales from Q3 to Q4 - Tim Glenn clarified that the reduction in Argentina is not a deferral but a permanent loss due to a 20% area reduction, while Brazil's summer sales are expected to be impacted as well [60][62] Question: Seed royalties expectations for next year - Chuck Magro expressed confidence in the journey to royalty neutrality, indicating that the preliminary view for next year is slightly less than the average of about $100 million [66][67] Question: Pricing environment for crop chemicals in Brazil - Robert King explained that Brazil's pricing was down about 18% for the quarter due to competition, but the company expects to finish the year in the mid-single digits for price [96][99]