FMC Corporation Stock Declines Overnight: Exploring the Causes

Shares of FMC Corporation have experienced a significant decline, dropping 26.55% in after-hours trading. This change follows the company’s announcement of a $510 million impairment charge related to its commercial operations in India, along with a dividend cut.

FMC Corporation’s Financial Struggles

In the third quarter, FMC Corporation reported a substantial net loss of $569.3 million, or $4.52 per diluted share. This contrasts sharply with a net income of $65 million recorded a year earlier. The losses are primarily attributed to issues linked to FMC’s India commercial business.

Write-Down of India Business

FMC’s India operations, initially valued at approximately $960 million, have been re-evaluated to an estimated fair value of $450 million. This change prompted a formal impairment charge of about $227 million. The total write-down encompasses pre-sale adjustments of around $282 million, stemming from product returns and pricing modifications.

Declining Revenue and Lowered Expectations

The revenue for the third quarter stood at $542 million, marking a dramatic 49% drop compared to the previous year. The decline results from one-time commercial actions in India aimed at preparing the business for sale. Excluding the Indian market, revenue decreased by 4% on a like-for-like basis.

• Pricing fell by 6%, influenced by manufacturing cost adjustments and competition from generics.
• FMC revised its 2024 revenue guidance down by 7%, projecting between $3.92 billion and $4.02 billion.
• Adjusted EBITDA expectations were also lowered by 6%, falling to $830 million to $870 million.
• The forecast for free cash flow has been adjusted to a range between zero and negative $200 million.

Dividend Reduction

The Board of Directors has decided to lower the quarterly dividend to $0.08 per share. Pierre Brondeau, the chairman and CEO, emphasized this decision aims to enhance cash generation and focus on reducing debt.

Leadership Changes

In related news, FMC announced the resignation of President Ronaldo Pereira, effective December 15. The departure was mutually agreed upon by Pereira and Brondeau. Pereira will assist in the transition until his departure date.

Regional Performance Overview

FMC’s performance varied regionally, with North America showing a 4% increase due to higher volumes, while Latin America experienced an 8% decline. Asia, excluding India, faced a staggering 47% decrease in sales.

Stock Market Performance

The stock has fallen 40.42% year-to-date, trading within a 52-week range of $28.71 to $67.75. As of Wednesday, FMC shares closed at $29.04, reflecting a decrease of 4.91% according to Benzinga Pro data.

Overall, FMC Corporation is navigating a challenging landscape as it seeks to address significant financial setbacks and restructure its operations.