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Corteva reports surprise profit, helped by Americas sales growth

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Corteva finished off 2019 with a surprise - underlying - profit and revealed a better-than-expected outlook for 2020, foreseeing growth from a recovery in US corn and soybean sowings, and raised seed prices.

 

Shares in the group, the seeds and sprays business spun-off in June from chemicals conglomerate DowDuPont, stood up 5.7% at $29.38 in morning deals in New York, adding more than $1bn to its stockmarket value.

 

Corteva revealed a narrowing to $21m, from $531m, in its reported loss for the October-to-December quarter, on revenues up 6.0% at $2.98bn.

 

Excluding one-time effects, the earnings equated to a positive $0.07 per share, beating market expectations that Corteva would report an underlying $0.12-per-share loss.

 

For 2020, the group guided to operating earnings per share of $1.45-1.55, on sales of $14.5bn.

 

Wall Street has pencilled in 2020 revenues of $13.8bn, and an operating earnings per share figure of $1.23.

 

Acreage expectations

James Collins, the Corteva chief executive, said that the group was foreseeing that “more normal weather conditions in North America will set the stage for further performance improvements”.

 

Its forecast factored in a recovery of 11m acres in US spring sowings, which were hampered last year by unusually wet conditions, with one-third of the area increase seen going to corn and two-thirds to soybeans.

 

Furthermore, it forecast a $250m boost to crop protection from growth in sales of new products.

 

Corteva also expects this year a further $200m in tie-up benefits from its formation as the merged agriculture assets of Dow Chemical and DuPont.

 

Americas lead

For the October-to-December quarter, the group reported particular sales growth, of an underlying 16% to $1.13bn, in North America.

 

The growth was fuelled by “pricing gains” in corn seed, and sales of its Enlist herbicide - a broadleaf weedkiller aimed for use with seed genetically modified to be tolerant to it – made “in preparation for the 2020 planting season”.

 

For Latin America, Corteva reported organic sales growth of 8%, to $1.11bn, helped by “strong demand for insecticides”,

 

While seed volumes fell by 1% in the region, thanks a slower start to the safrinha crop planting season than a year before, seed prices soared 8%, as the group’s newer offerings rose in market share.

 

Sales in Europe rose by 7% to $404m on an organic basis, while those in Asia shrank by 6% to $341m.

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