Corteva(US:CTVA)2023-11-09 18:27Financial Data and Key Metrics Changes - The company reported a year-to-date operating EBITDA of nearly $3 billion, reflecting a 5% increase over 2022 despite a 1% decline in sales compared to the prior year [67][68][69] - Global pricing increased by 9%, with a 14% rise in global seed prices year-to-date, while crop protection pricing was up 4% [68][70][71] - Operating EPS is now expected to be in the range of $2.50 to $2.70 per share, down 3% versus the prior year at the midpoint [77] Business Line Data and Key Metrics Changes - Seed net sales increased by 7% year-to-date to over $7.8 billion, with organic sales up 9% driven by strong price execution [70] - Crop protection volumes decreased by 16% year-to-date, impacted by channel destocking and a shift in timing of seasonal demand [71][89] - The company expects to record pretax restructuring and asset-related charges of $410 million to $460 million through the end of 2024 [95] Market Data and Key Metrics Changes - In Brazil, the company anticipates continued destocking into 2024, with a unique situation of elevated channel inventories and increased generic supply impacting overall product availability [19][21][82] - The company noted that corn production in Europe remains below pre-conflict levels, particularly in the Black Sea region, where production is down 30% [65] - The company expects a modest shift from corn to soybeans in the US in 2024 due to various market dynamics [86][98] Company Strategy and Development Direction - The company is focused on enhancing its competitive position through a strategic framework aimed at margin expansion and long-term value creation [59][60] - The company plans to optimize its global crop production network, including exiting production activities at certain sites to improve cost competitiveness [80][81] - The company expects to achieve annual run rate savings of approximately $100 million by 2025, enhancing competitiveness and customer service [62][96] Management's Comments on Operating Environment and Future Outlook - Management indicated that while the ag markets remain constructive, they are mixed, with destocking largely behind in North America but expected to continue in Latin America and Europe [82][84] - The company expects low single-digit pricing growth for 2024, driven primarily by the Seed business, while Crop Protection pricing may face pressures [105][106] - Management remains confident in achieving the 2025 EBITDA guidance despite current market challenges, including geopolitical and macroeconomic factors [148][149] Other Important Information - The company has committed to returning cash to shareholders, evidenced by $750 million in share repurchases this year [64][78] - The company expects free cash flow to be in the range of $600 million to $1 billion, reflecting lower earnings and higher inventory [117] Q&A Session Summary Question: Can you expand on the flow-through of Seed and Crop Chem costs next year? - Management acknowledged that there will be a lag in higher costs flowing through inventory and into the P&L, with a focus on managing working capital effectively [13][25] Question: What are the expectations for Brazil's destocking and Crop Protection volume outlook? - Management indicated that while there will be some growth in the fourth quarter in Brazil, overall volume expectations for 2024 remain muted due to high channel inventories and delayed farmer purchases [19][20] Question: How do recent changes in Crop Protection impact confidence in achieving 2025 EBITDA guidance? - Management expressed confidence in achieving the midpoint of the 2025 EBITDA guidance, despite current market dynamics and challenges [147]