FMC Corporation has experienced a considerable downturn in its stock performance, primarily driven by a substantial financial write-down concerning its Indian commercial sector and a subsequent cut in its dividend. This significant event has cast a shadow over the agricultural sciences firm's third-quarter results, revealing a notable net loss that contrasts sharply with the previous year's profits. The strategic decision to divest the India business, coupled with broader market challenges, has necessitated a recalibration of the company's financial outlook and operational priorities. Stakeholders are now closely monitoring the company's efforts to mitigate these impacts and stabilize its market position.
The sharp decline in FMC Corporation's shares, specifically a 26.55% drop in after-hours trading, was a direct consequence of two major announcements. Firstly, the company declared a staggering $510 million write-down on its India commercial business. This segment, initially valued at approximately $960 million, was reassessed to an estimated fair value of $450 million. The write-down included a formal impairment charge of about $227 million, alongside pre-sale commercial adjustments totaling $282 million. These adjustments were implemented to facilitate faster receivables collection and optimize working capital in preparation for the business's sale. Secondly, the board of directors opted to reduce the quarterly dividend to $0.08 per share, a move explicitly aimed at prioritizing cash generation and accelerating debt reduction. These combined factors painted a grim picture for investors, leading to the rapid depreciation of the stock's value.
FMC Corporation's financial results for the third quarter highlighted a GAAP net loss of $569.3 million, or $4.52 per diluted share, a stark contrast to the $65 million net income reported in the same period a year prior. This loss was largely attributed to the aforementioned charges related to its India commercial business, which has been classified as held-for-sale. Furthermore, the company reported a significant 49% decrease in third-quarter revenue, reaching $542 million, primarily due to the one-time commercial actions undertaken in India. Excluding the India operations, revenue still saw a 4% decline on a like-for-like basis. Pricing was also negatively affected, dropping by 6%, with half of this decline stemming from cost-plus contract adjustments with diamide partners due to lower manufacturing costs, and the remaining half from heightened competition from generics in Latin America and Asia. The challenging market conditions and the internal restructuring efforts collectively contributed to the company's diminished financial performance.
In response to the deteriorating financial outlook, FMC Corporation revised its full-year guidance downwards. The agricultural sciences company now expects full-year revenue to range between $3.92 billion and $4.02 billion, a 7% reduction at the midpoint. Similarly, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast was lowered by 6%, to a range of $830 million to $870 million. The guidance for free cash flow was also significantly impacted, projected to be in the range of zero to negative $200 million. Amidst these financial adjustments, the company announced leadership changes, with President Ronaldo Pereira stepping down on December 15. Although Pereira will remain in an advisory capacity for a smooth transition, this executive departure signals a period of significant strategic reevaluation and restructuring within the organization. The stock's year-to-date performance reflects these challenges, showing a 40.42% decline, with its market capitalization standing at $3.63 billion.
The company's regional performance varied, with North America showing a 4% increase in volume, while Latin America and Asia (excluding India) experienced declines of 8% and 47% respectively. To enhance efficiency and reduce costs, FMC is actively reconfiguring its manufacturing footprint, shifting production to more economical facilities. These measures, alongside the dividend reduction, underscore a clear corporate strategy focused on cash generation, debt reduction, and operational optimization during a challenging period. The stock, which closed at $29.04, reflecting a 4.91% decrease on Wednesday, continues to exhibit a downward trend across all timeframes according to various stock rankings, indicating persistent investor concerns regarding the company's financial health and future prospects.