- FMC shares fell sharply after the chemical maker issued first-quarter earnings guidance significantly below analyst expectations due to weak sales volumes and inventory reduction challenges.
- The company’s Latin American business reported a 38% drop in fourth-quarter sales, exacerbated by drought conditions in Brazil.
- Although the FMC share price has recently broken back above the 50-day moving average, it looks set to retest the key $50 level.
FMC Corp. (FMC) shares fell more than 14% before the opening bell on Tuesday after the agricultural chemicals maker issued weak first-quarter earnings guidance as the company continues to grapple with low volumes. sales and stock reduction challenges after the pandemic.
The maker of insecticides and crop aids said it expects adjusted earnings for the current quarter to range from 21 cents to 43 cents per share, less than half the $1 per share figure that analysts had forecast. For the three-month period ended Dec. 31, the company posted adjusted earnings per share (EPS) of $1.07, compared with $2.37 a year earlier, while revenue of $1.15 billion declined 29% compared to the corresponding quarter of the previous year.
FMC said stock reduction presented ongoing challenges across all of its geographic regions. During the pandemic, supply chain bottlenecks led many distributors to stockpile crop chemicals, resulting in excessive inventory levels that customers are still working through. The chemicals maker also said drought conditions in Brazil had hit profits. In the December quarter, FMC’s Latin American business, which accounts for about a third of total revenue, saw a 38% drop in sales.
“During the fourth quarter, we saw continued carcass inventory reduction across all regions, while drought in Brazil also amplified challenges in Latin America,” CEO Mark Douglas said in the company’s earnings release.
Since falling below the key $50 level in late October due to a disappointing third-quarter update, FMC’s stock price has stabilized somewhat and even managed to recover above the 50-day moving average. If earnings-driven selling intensifies in the coming trading sessions, keep an eye on whether buyers can defend the $50 level. Successful control of this zone could help change investor sentiment, while a convincing breakdown could lead to a resumption of the long-term downtrend.
FMC shares fell 14.1% to $51.88 about 45 minutes before the opening bell.
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