Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: A lot has changed since November, especially in your Seed business. How should we think about these potential positives versus the FX risks as we try to triangulate the midpoint of your guidance? A: Charles Magro, CEO: The market has turned more positive in the last three months, with strong demand for crops and improving farmer margins. We expect 2025 to be the year of corn due to tight stocks-to-use ratios. The CP industry is recovering, and we have balanced inventories. David Johnson, CFO, added that the outlook for currency is balanced, and the CP industry is expected to see low single-digit negative pricing in 2025, which is an improvement over 2024.
Q: In 4Q, production costs in Crop Protection were lower than expected, while Seed costs were higher. Can you explain these dynamics and their implications for 2025? A: Charles Magro, CEO: We've been optimizing our CP footprint, leading to productivity gains, and we're ahead of plan. In Seed, we had high-cost inventory in Latin America due to 2023 issues, which we cleared for 2025. Robert King, EVP of Crop Protection, noted that cost reductions and raw material deflation are on track, while Judd O'Connor, EVP of Seed, mentioned competitive pricing in Latin America but a positive outlook for 2025.
Q: Can you discuss the cadence of earnings growth across the year? A: David Johnson, CFO: We expect slight growth in the first half of 2025 compared to 2024, with a better year-over-year comparison in the second half. This is due to improvements in Brazil's Seed cost position and CP pricing trends, which are expected to stabilize in the second half.
Q: Your Crop Protection EBITDA margins increased significantly. What were the key drivers? A: Robert King, EVP of Crop Protection: The strong Q4 performance was driven by new products, biologicals, and spinosyns, particularly in Brazil. Fungicides and insecticides also contributed to margin growth. Cost reductions of $170 million year-over-year further supported the margin increase.
Q: Regarding 2025 guidance, why was the top end cut by $200 million instead of $100 million? A: David Johnson, CFO: We narrowed our guidance range for 2025, with the midpoint reduced by $100 million due to FX impacts. The top end was cut by $200 million to reflect a more balanced outlook, considering potential currency fluctuations and CP market dynamics. Charles Magro, CEO, added that a flattish CP market was a consideration, and currency impacts were significant.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.