FMC Biopolymer Performs Well as FMC is Impacted by Recession

Agricultural Products reported record results driven by strong North American performance and continued supply chain improvements. Specialty Chemicals' earnings were slightly lower as a result of strong BioPolymer performance offset by weak lithium primaries.

20 Aug 2009 --- FMC Corporation has reported net income of $69.3 million, or $0.94 per diluted share, in the second quarter of 2009, versus net income of $84.4 million, or $1.10 per diluted share, in the second quarter of 2008. Net income in the current quarter included restructuring and other income and charges of $11.3 million after-tax, or charges of $0.16 per diluted share, versus restructuring and other income and charges of $14.5 million after-tax, or charges of $0.19 per diluted share, in the prior-year quarter. Excluding these items in both periods, the company earned $1.10 per diluted share in the current quarter, a decrease of 15 percent versus $1.29 per diluted share in the prior-year quarter. Second quarter revenue of $700.3 million was 13 percent lower than $806.6 million in the prior year.

William G. Walter, FMC chairman, president and chief executive officer, said, "Our second quarter results reflect continued strong performance in our businesses serving end markets with low correlation to economic cycles. As expected, volumes in our businesses with economically-sensitive end markets were significantly impacted by the global recession. Agricultural Products reported record results driven by strong North American performance and continued supply chain improvements. Specialty Chemicals' earnings were slightly lower as a result of strong BioPolymer performance offset by weak lithium primaries. Industrial Chemicals' results directly reflected the impact of lower volumes and higher raw material costs."

Revenue in Agricultural Products of $252.4 million decreased 9 percent versus the prior-year quarter, as sales gains in North America were more than offset by lower sales in Europe and Asia as well as unfavorable currency impacts. Segment earnings of $90.5 million increased 7 percent versus the year-ago quarter, reflecting stronger performance in North America, favorable global supply chain performance and lower selling and administrative expenses.

Revenue in Specialty Chemicals was $192.7 million, essentially level to the prior-year quarter. Higher selling prices and volumes in BioPolymer were more than offset by lower lithium volumes. Segment earnings of $40.5 million were 2 percent lower than the year-ago quarter, as favorable commercial performance and the benefits of productivity initiatives and acquisitions in BioPolymer were more than offset by lower lithium volumes, temporary plant curtailments taken to reduce inventories and unfavorable currency translation.

Revenue in Industrial Chemicals of $256.2 million declined 24 percent from the prior-year quarter, as lower volumes across the segment and unfavorable currency translation more than offset higher selling prices in most businesses. Segment earnings of $13.5 million were 70 percent lower than the year-ago quarter, driven by the lower volumes and higher raw material costs, primarily phosphate rock.

Corporate expense was $10.3 million, down from $13.1 million in the prior-year quarter. Interest expense, net, was $6.5 million, as compared to $8.3 million in the year-ago quarter. On June 30, 2009, gross consolidated debt was $633.8 million, and debt, net of cash, was $566.8 million. For the quarter, depreciation and amortization was $30.9 million and capital expenditures were $40.8 million.

For the six months, revenue was $1,390.8 million, a decrease of 11 percent as compared with $1,556.8 million in the prior-year period. Net income was $138.4 million, 22 percent lower than $178.3 million in the year-earlier period. Net income in the current period included restructuring and other income and charges of $31.5 million, versus restructuring and other income and charges of $11.8 million in the prior-year period. Excluding these charges, the company earned $169.9 million in the first half of 2009, a decrease of 11 percent versus $190.1 million in the first half of 2008.

Revenue in Agricultural Products was $513.8 million, a decrease of 7 percent versus the prior-year period, as sales gains in North America were more than offset by lower sales in Latin America, primarily Brazil, and unfavorable currency impacts in Europe and Asia. Segment earnings were $183.0 million, an increase of 9 percent from the first half of 2008, as a result of higher selling prices, favorable product and geographic mix, continued global supply chain productivity improvements and lower selling and administrative expenses.

Revenue in Specialty Chemicals was $367.2 million, 2 percent lower than the prior-year period, as strong commercial performance in BioPolymer was more than offset by lower lithium volumes. Segment earnings of $78.6 million decreased 3 percent versus the year-earlier period as favorable commercial performance in BioPolymer and the benefits of productivity initiatives and acquisitions were more than offset by lower lithium volumes, temporary plant curtailments taken to reduce inventories and unfavorable currency translation.

Revenue in Industrial Chemicals was $512.2 million, a decrease of 19 percent versus the prior-year period, as lower volumes more than offset higher selling prices across the segment. Segment earnings of $36.3 million declined 55 percent versus the year-earlier period, driven by lower volumes and higher raw material costs, particularly phosphate rock, which more than offset favorable pricing across the segment.

Corporate expense was $21.6 million, down from $25.0 million in the year-earlier period. Interest expense, net, was $13.5 million, as compared to $17.0 million in the prior-year period. For the period, depreciation and amortization was $61.2 million and capital expenditures were $71.8 million.

Regarding the outlook for 2009, Walter said, "For the full year 2009, we have revised our outlook for earnings before restructuring and other income and charges to $4.00 to $4.20 per diluted share. Relative to the first half of the year, we anticipate improved business conditions in the second half with our performance benefiting from volume gains in nearly every business, improving agricultural market conditions in Brazil and lower raw material costs, particularly in Foret."

Walter added, "For the third quarter of 2009, we expect earnings before restructuring and other income and charges of $0.85 to $0.95 per diluted share. In Agricultural Products, we look for earnings to increase 30 to 35 percent driven by improving market conditions in Brazil and lower raw material costs. In Specialty Chemicals, we expect earnings to be up in the mid-single digits as continued strong performance in BioPolymer is partially offset by lower lithium results. In Industrial Chemicals, earnings are expected to decline 55 to 65 percent, as higher soda ash selling prices and improving raw material costs are more than offset by lower volumes across the segment and reduced selling prices in phosphates."