Welcome to the 54th edition of Upstream Ag Professional!
Index
Q2 2024 Crop Protection Business Earnings Themes, Highlights and Analysis
CHS and AgVend Forge Collaboration to Enhance Ag Retailer Experience
Nutrien Q2 2024 Earnings Highlights and Analysis
BioLumic Pioneers New Seed Traits with Seed Company Partners
Corteva Competitor Inari Must Face Seed Patent Lawsuit
Illustrative AgTech Insights: Eroding Influence, New Products and the Retail Advisor
The Frontier: Extend Through the Value Chain
Other Interesting Ag Articles (7 this week)
1. Q2 2024 Crop Protection Business Earnings Themes, Highlights and Analysis - Upstream Ag Professional
Last week, I went through earnings call transcripts and quarterly crop protection company earnings results aiming to synthesize the themes, trends and key takeaways across the crop protection manufacturers segment of the agriculture industry.
In the linked article, I share:
one financial comparison chart of major crop protection and seed companies
three themes from Q2 2024
seven notable insights, quotes and images
highlights and key takeaways from eight crop protection and seed manufacturers.
Bayer Crop Science
BASF
Corteva
FMC
UPL
Nufarm
Sharda
Note: Syngenta results were not available at the time of publication.
In the email below is ONLY the financial chart and the first two themes. For the full article, see the link in the heading.
Financial Comparison
Note: In the future I am going to expand these images beyond revenue, EBITDA and margin— likely to include metrics like inventory, SG&A and percent of revenue in North America. If there are any metrics you are interested in, please do not hesitate to send me a message: shane@upstream.ag
Revenue growth of all companies except BASF was flat. BASF had a particularly challenging quarter, in large part due to its glufosinate business which according to their investor call makes up about 20% of total BASF herbicide sales, which means it is around 7% of their total ag revenue and it had high raw material costs and increased generic competition, driving them to get out of their GA manufacturing facilities all together and look to source from third-parties.
Themes
a. Crop Protection Pricing
Volumes are trending more positive in crop protection segments, but pricing in Q2 was not.
Last year the industry experienced much higher COGS and pricing which makes the pricing dynamics look poorer, when what is happening now is a reversion to the mean. However, there is some more nuance to it, being driven by multiple aspects and varying parameters, depending on the company, but some central considerations:
Competitive pressures driving a reduction in price.
Strategic intent to take back market positions in certain product segments, and using price as an avenue.
Incentives to address high-cost inventory in the channel.
High COGS for manufacturing product from last year/high priced inventory
Some quotes from agribusiness executives around pricing dynamics:
UPL CEO Mike Frank:
Price was a clear headwind for us in our first quarter. Again, it's comparing to a quarter last year where prices were quite a bit higher than they were right now. So what I would expect as the year plays out, I don't think there's going to be very material price increase opportunities but our margins will improve and the pricing difference on a quarter-by-quarter basis will start to normalize as we go from Q2 to Q4 this year. So that's what I would expect from a pricing standpoint.
He went on to state the following around the bottoming out of prices:
Prices largely have even now, in last 3 months, largely stabilized…barring one insecticide and one herbicide. But I mean if you see the prices currently, that looks like that it's like at cost or with a very thin margin these guys are selling. So they're just trying to recover the fixed cost. So I do believe that these prices have really bottomed out and don't see much room there for further erosion. We know that China prices are lower than they were a few years ago. Largely, they've stabilized from what we're seeing over the last 3 or 4 quarters. We're not expecting to see prices increase this year. They could. But we also don't expect them to go down really much from this point either. And so -- that's our base assumption that we're baking into how we're forecasting the rest of the year.
