This is a summary of the first quarter fiscal 2008 earnings call as conducted by FMC Corp. (FMC) on April 24, 2008
Management
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Chairman of the Board, President and CEO: William G. Walter
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Sr. VP and CFO: W. Kim Foster
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Director, IR: Brennen Arndt
Key Investors Issues:
- Net income of $93.9 million, or $1.23 per share, rose 105% from $45.8 million, or 59 cents per share in the prior year.
- Revenue of $750.2 million increased 11% versus $674.1 million in the prior year.
- Earnings before restructuring and other income and charges are forecasted at $3.90 to $4.10 per diluted share.
First Quarter Highlights
Sales of $750 million increased 11% from $674.1 million in the prior year on strong segment sales.
- In Ag Products sales of $278 million increased 12% driven by higher sales in Latin America, Asia and Europe, and continued supply chain productivity improvements.
- In Specialty Chemicals, sales of $184 million were driven by higher selling prices and volume growth in BioPolymer and lithium specialties drove the performance gains.
- Industrial Chemicals, sales of $290 million increased 11% driven primarily by higher selling prices and volumes across the segment, as well as improved power market conditions in Spain.
FMC reported income of $93.9 million or $1.23 per diluted share, up 105% from $45.8 million, or 59 cents a share on revenue growth as raw material and energy costs unfavorably impacted earnings by 13 cents per share.
- Currency translation favorably impacted earnings by 2 cents in the quarter.
- In Latin America, sales growth was particularly strong in Brazil, as the firm continued to benefit from the country''s robust agricultural economy.
- FMC Corporation experienced demand growth across its entire product portfolio and all crop segments, but particularly in sugar cane, cotton, and soybeans.
- Performance gains were achieved in many countries, particularly strongly in the rice market in India and the winter cereal market in Australia.
In Europe, the firm''s growth was driven by favorable early season weather conditions and some new product introductions.
- Ag Products'' earnings of $82.9 million were 17% higher than the record year-ago quarter, reflecting the broad-based sales gains and continued supply chain productivity improvements.
- This more than offset higher raw material costs, particularly chemical intermediates and solvents.
- Specialty Chemicals, reported earnings of $39.5 million both increased 11% versus the prior-year quarter, driven by higher selling prices and volume growth in BioPolymer and in lithium specialties.
Continued manufacturing productivity improvements were largely offset by higher raw material costs.
- In pharmaceuticals, there was continued growth in demand for oral tablet drugs.
- Sales in Europe and Asia, and generic drug manufacturers across all regions strong were in the quarter.
- In food ingredients, performance was driven by higher selling prices and continued volume growth in Asia and Latin America, primarily in the dairy segment.
In lithium, earnings growth was the result of higher prices and volume growth for specialty lithium compounds, particularly into the pharmaceutical market.
- Segment earnings of 35.6% more than doubled versus a year ago, as a result of the higher sales and improved power market conditions in Spain.
- In soda ash, market conditions remained tight, as all US soda ash producers continue to operate at full capacity.
- Both domestic and export soda ash businesses benefited from new contract terms, as higher selling prices were the primary driver of earnings growth.
The North American peroxygens realized higher selling prices and volume growth across both hydrogen peroxide and specialty peroxygens business.
- Foret achieved significantly improved performance relative to a year ago.
- Higher prices particularly in phosphates, hydrogen peroxide demand growth, and improved power market conditions were the primary drivers of earnings increase, which more than offset the higher raw material costs, particularly phosphate rock.
Fiscal 2008 Outlook
- Earnings before restructuring and other income and charges are forecasted between $3.90 to $4.10 per diluted share.
- In Ag Products, full-year segment earnings growth is expected to be in the low to mid-teens, driven by good sales growth across all regions and product lines and further supply chain productivity improvements.
- In Specialty Chemicals, full-year segment earnings growth in the mid-single digits, due to lower selling prices for primary lithium compounds and higher export taxes in Argentina.
- In Industrial Chemicals, we anticipate full-year segment earnings growth of 60% to 70%, driven by aggregate price and volume benefits across the segment.
