Pesticide seller FMC Corp will aim for its industry’s fastest revenue growth with the help of assets acquired from rival DuPont, even as farm markets struggle to recover, Chief Executive Pierre Brondeau said on Monday.
Philadelphia-based FMC will focus on increasing sales of crop chemicals developed internally, and avoid big acquisitions for a few years, after it closes a deal this year to swap its health and nutrition business for part of E I du Pont de Nemours and Co’s crop protection business, Brondeau said in an interview.
The deal, announced in late March, would vault FMC to the world’s No. 5 pesticide maker by sales from eighth-largest in a market where abundant grain production has softened crop prices.
The swap will bring to FMC 15 crop chemicals that DuPont has in development, adding to nine in FMC’s pipeline.
“My objective is we need to be … from an organic growth standpoint, the fastest-growing company in the industry,” Brondeau said. “We believe we can grow today, even if we are at the bottom of the (agriculture) cycle.”
FMC will target mid- to high single-digit annual revenue growth starting in 2018, Brondeau said.
Smaller producers, such as Nufarm and Sumitomo Corp’s crop chemical business, might need to combine, Brondeau said.
“The big five are going to be so strong that some of these smaller companies are going to have to join forces,” he said.
Demand for crop chemicals has dropped in North America and Europe this year, but is climbing in Asia and Latin America, Brondeau said.
FMC shares hit a nearly three-year high in April following the DuPont deal.
While FMC aims for growth, a proposed U.S. border tax would be “really bad” for the industry, since production of certain chemical ingredients cannot easily move from other countries.
“Somebody is going to have to pay for it,” he said. “It would be U.S. farmers.”
FMC also produces lithium, a commodity in demand for use in electric vehicles.
The company will decide next year how to separate the lithium business, likely by initial public offering or spin-off. Selling it to a single buyer “is a very long shot,” as it would incur high taxes, Brondeau said.
FMC plans to decide by 2018 whether to roughly double lithium carbonate equivalent production in Argentina. Brondeau said there is “very high probability that it will be a go.”
By Rod Nickel
Source: Reuters
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