FMC is overhauling how it prices crop chemicals. In the U.S., it plans to meaningfully tighten the gap between list prices and what customers actually pay, moving away from the former high-price, heavy-rebate model. It is also taking pricing actions in Brazil, Argentina and Canada. Management said these moves will reduce third-quarter results by roughly $625 million to $675 million and that it now anticipates a loss on an adjusted Ebitda basis of $510 million to $565 million for the period.
Chief Executive Officer Pierre Brondeau put it bluntly: "Third-quarter demand was weaker than we expected, driven by challenging market conditions and elevated levels of higher-priced FMC products held in inventory by certain channel customers, which are limiting product movement and replenishment demand." He added, "We have addressed this issue incrementally over several quarters, but under current market conditions, we determined that more comprehensive actions are necessary."
Farmers facing higher interest rates and production costs have been pulling back, and lower-cost rivals have piled on pressure for the Philadelphia-based company. FMC said distributors want to run with the leanest inventories the company has seen, and those supplies have been slow to reach growers. The rise of generic crop chemicals has triggered "rapid market price declines," which widened the gap between what distributors paid for existing stocks and today's market prices.
The challenges have been building. FMC has dealt with patent expirations on key products in recent years, opening the door to cheaper copycats. Earlier this year, after completing a strategic review, it agreed to divest a minority equity stake to Brussels-based Tessenderlo Group for $400 million.
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Investors hit the eject button. FMC's stock tumbled by as much as 40% to the weakest level since 2003 and is off more than 60% year-to-date. Peer crop protection name Corteva Inc. fell by as much as 7.4%. In credit markets, its investment-grade 2031 notes saw yields jump to roughly 10.5%, per Trace pricing data.
Barclays cut its price target to $4 from $9. Analysts led by Benjamin Theurer wrote that while this looks like "a continuation of FMC's 'reset' in its operations," the ongoing structural and guidance changes are "underscoring the unreliability from management and lack of visibility as to ongoing market challenges." Meridian Ag Advisors' chief agriculture economist, Wesley Davis, cautioned there is "a real risk that FMC loses even more market share, especially if they don't have those incentives retailers have come to expect."
FMC also said it plans to begin talks with lenders on "potential further modifications to its covenants over the next year to provide greater flexibility" as it executes the overhaul, and it believes it will be in compliance with covenants as of Sept. 30.
Circle late October. FMC is set to release third-quarter results on Oct. 29 and intends to present an initial outlook for 2027 and 2028 during its Oct. 30 call. For everyday investors, the two big tells will be whether pricing changes spark real volume recovery without ceding too much share, and how lenders and the bond market respond as the company negotiates flexibility.
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