Corteva 2024 Investor Day Highlights and Analysis

This week I attended the Corteva Investor Day, giving me an opportunity to see the company’s macro level strategy and business aspects, as well as participate in the afternoon R&D pipeline event where Corteva walked through new areas of their business including hybrid wheat, biofuel efforts and new digital efforts across their business.

The breadth of the event was immense, so I do not touch on all facets of the day. If you are interested in looking at all of the topics, you can check out their Investor Day Presentation.

Index:

1. Integrated Strategy and Differentiation

2. Business Overview

3. Growth Drivers out to 2027

   1. Seed and Trait Licensing

   2. Biological Expansion

4. Future Growth (2027+)

   1. Hybrid Wheat

   2. Biofuels

5. Short Stature Corn

6. Decision Science and Pioneer Channel Enablement

7. Other Interesting Takeaways, Images and Quotes

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Integrated Strategy

One of the first books I read on strategy was Playing to Win by Roger Martin.

In it, Martin reinforces that strategy is an integrated set of 5 choices that uniquely positions the firm in its industry to create a sustainable advantage and superior value relative to the competition.

What I have always liked about the framework is that it focuses you and is simple to follow.

The Corteva strategy is a masterclass in how to deploy the principles from the book, which include identifying:

1. What is our winning aspiration?

2. Where will we play?

3. How will we win where we have chosen to play?

4. What capabilities must be in place to win?

5. What management systems are required to ensure the capabilities are in place?

Since laying out the their business strategy in 2022, Corteva has continued to execute against their conveyed focus:

1. ~110 countries, ~20 must-win countries

2. Focused investment in select crops Seed: corn, soy, canola, sunflower, cotton, sorghum and for Crop Protection: fruit & vegetables, corn, soy, cereals, rice

3. Focus on differentiated, sustainable solutions (crop protection specifically)

4. Grow seed licensing business and distribution channel

5. Redirect and increase R&D investment

That has lead to strong revenue and margin growth, even in the face of challenging crop protection dynamics (yet, some favorable regulatory dynamics surrounding dicamba, leading to more rapid success in seed for North America):

Corteva lays out their differentiation enabling this strategy as the following:

The advantaged route to market I believe will become a bigger advantage for their entire business segment in future, as they have the opportunity to better integrate biologicals and digital tools to empower their Pioneer Seed Channel (more on this below).

Overview of Business

North America remains about 50% of Corteva’s revenue, with seed making up 56% of total revenue:

Note the growth in differentiated products. Differentiated products have an average margin improvement of ~10-15% compared to overall CP portfolio average.

The revenue and geography breakout for 2024 (estimates) remain relatively unchanged compared to 2023:

With margins expected to grow out towards 2027:

Growth Drivers

Corteva has laid out what they view as drivers of growth:

Surrounding their Growth Drivers for the next ~3 years, they call out the following:

1. Seed and Trait Licensing

2. Biological Expansion

3. New Crop Protection Products

I’ll look at the first two.

Seed and Trait Licensing