FMC (FMC) Q2 FY26 earnings call: guidance and Q&A

What are the sequential drivers for the significant improvement in sales and margin from Q3 to Q4, and how certain is management of these buckets?

The ramp-up is driven by three main buckets: non-diamide core business (including Brazil direct sales and North America order shift) contributing ~$150M, new active ingredients contributing ~$70M (fluindapyr in North America, Isoflex in Australia), and branded Rynaxypyr in Latin America contributing ~$40M. The non-diamide core is largely seasonal, while new active ingredients and Brazil strategy are specific actions.

“Three big drivers on the positive front. First, the non-diamide core, and that includes the growth, of course, in direct sales in Brazil. We're expecting this to be about $150 million. The new active ingredients, we believe with the number we still are forecasting, it's going to be, from Q3 to Q4, about $70 million. And then you have others, including branded Rynaxypyr, especially in Latin America, in the range of $40 million.”

asked by Patrick Fischer · answered by Pierre Brondeau

Given 2026 is a transition year, when will the benefits of current actions be seen, and how will the company improve going forward?

Management believes 2026 is the trough and 2027 will be the first growth year. Key drivers for 2027 growth include the non-diamide core business returning to 1-2% growth (+$120M-$150M), new active ingredients accelerating to 50-70% growth (+$150M-$200M), and branded Cyazypyr continuing mid-single-digit growth (+$20M). The shift to co-ops and direct sales in Brazil will also contribute. Overall, this implies a natural growth of $300M-$350M in 2027.

“We believe the worst is behind us with the loss of IP protection on Rynaxypyr. And for Rynaxypyr, all signs are pointing to us being able to protect Rynaxypyr earnings in '27. ... this is a natural growth of $300 million to $350 million in '27 versus 2026.”

asked by Edlain Rodriguez · answered by Pierre Brondeau

Can you elaborate on the significant decline in North America, the competitive market, and its sustainability?

North America's decline was primarily volume-driven due to low insect pressure, the lowest rice production since 1997 (a key specialty crop market for FMC), and growers managing costs by shifting to generics or skipping applications in row crops. Additionally, the loss of IP protection for the pyroxasulfone herbicide impacted pricing and volume. The competitive market is a result of these factors.

“North America was down. It is the negative news of the quarter for us. And there is multiple drivers. They all went the wrong way. First and above all, it's a volume story. ... Rice production was at the lowest level since 1997. That was -- that's a big market for us, very low insect pressure.”

asked by Frank Mitsch · answered by Pierre Brondeau

What is the intermediate to longer-term growth outlook for diamides, including new entrants, and which insecticide classifications are being displaced?

The strategy for Rynaxypyr is focused on high-end product mix (new mixtures, high concentration products) which are growing fast (35%). Early signs suggest market growth and share gains against lower-end insecticides, particularly in Brazil. The big test for market penetration and stabilization of earnings will be in Q3/Q4 with new generics entering North America and Brazil. The goal is to protect Rynaxypyr earnings contribution in 2027, not necessarily to drive overall company earnings growth.

“I would say that the number one sign of success we are looking in a strategy is the mix of our portfolio as we were expecting is shifting towards the high-end product. We are growing very fast on the new mixtures we have, especially the bifenthrin and Rynaxypyr mixture as well as the high concentration products. So 35% growth in that sector.”

asked by Christopher Parkinson · answered by Pierre Brondeau

Given the lower-than-expected 2026 performance, are there other actions planned to protect the balance sheet, such as a dividend cut?

Management is focused on improving working capital, particularly inventory reduction this year and receivables next year, driven by the Brazil strategy shift to co-ops and direct sales. The dividend, which costs $50 million annually, is a topic of ongoing discussion with the Board, but no decision has been made at this stage.

“As you know, our dividends are small. It is certainly a topic we will have with the Board and continue to have with the Board, a $50 million cost annually. But no decision, absolutely no decision has been taken at this stage in terms of the dividend.”

asked by Joel Jackson · answered by Pierre Brondeau

What were the quarter-specific items that benefited Q2 costs, and what are the cost headwinds/tailwinds for the second half?

Q2 cost favorability came from improved non-manufacturing items (SG&A, R&D) and some smaller, positive quarter-specific items like an over-accrued shipment reserve. For the second half, Q3 is expected to be a flattish cost quarter due to a tough prior-year comp, while Q4 is expected to have significant cost favorability driven by lower raw material purchase prices.

“We had some improved cost favorability in non-manufacturing items. Some of that's SG&A and R&D. And some of it, quite honestly, is just some smaller items that generally, we wouldn't talk about, but we had a couple of things that were positive in the quarter and that did contribute. ... everybody should expect Q3, flattish costs; Q4, a pretty strong tailwind for cost.”

asked by Patrick Cunningham · answered by Andrew Sandifer