On Mar 13, we issued an updated research report on chemical
). While the company is seeing healthy momentum in its
agricultural business, it is exposed to currency headwinds and
softness in its minerals business.
FMC Corp. posted better-than-expected fourth-quarter 2013 results
on Feb 5 with both revenues and adjusted earnings beating Zacks
Consensus Estimates. Profit (as reported), however, slid roughly
74% year over year on charges related to the sale of the
company's Peroxygens business. Revenues rose around 24% on gains
across the board.
FMC Corp., a Zacks Rank #3 (Hold) stock, is well placed to meet
or exceed its targets for "Vision 2015, a road map for future.
Recent acquisitions and development agreements are adding
strength to its agricultural business. The company expects a 15%
year over year rise in earnings per share in 2014 (based on the
midpoint of its guidance range) and anticipates business
fundamentals to improve this year.
FMC Corp. sees above-market rate growth to continue for its
agricultural business in 2014, driven by favorable market
conditions, continued market share gains and new product
introductions. Moreover, the Omega-3 product line and expanding
portfolio are expected to drive earnings in the company's health
and nutrition franchise.
FMC Corp. is also optimistic about its lithium business as demand
is expected to remain strong on the back of greater adoption in
electric vehicles and other applications.
However, FMC Corp. is exposed to significant currency headwind.
Unfavorable swings in exchange rates affected its results last
year. Unhedged currency movements reduced its earnings by roughly
$13 million (or 9 cents per share) in 2013, mostly related to
Brazilian real. While the company has taken up effective pricing
strategy to offset the impact, its results remain susceptible to
currency translation effects.
Moreover, FMC Corp.'s Minerals unit, a more cyclical business,
remains somewhat weak with continued double-digit decline in
profits. A soft soda ash export pricing environment and high
costs are hurting the segment's profitability. This has triggered
the company's recent decision to separate the unit. While soda
ash export pricing is improving of late, the company currently
has limited visibility on that front.
Key Picks from the Sector
Other companies in the chemical industry with favorable Zacks
The Dow Chemical Co.
LyondellBasell Industries NV
PPG Industries Inc.
), all with a Zacks Rank #2 (Buy).
DOW CHEMICAL (DOW): Free Stock Analysis
FMC CORP (FMC): Free Stock Analysis Report
LYONDELLBASEL-A (LYB): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
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