Corteva Inc raised its full-year sales and profit forecasts on Thursday, citing increased demand from farmers looking to capitalize on higher prices since the Ukraine war. In addition to reporting a 14% increase in second-quarter operating earnings, the company announced plans to exit some non-core geographies and product lines as part of a previously announced strategic review.
Corteva stated that as part of the plan, it is "right-sizing and optimizing its cost structure" and expects to record related charges of approximately $400 million through the second quarter of 2023, roughly half of which represents cash payments.
The agricultural chemicals company stated that the strategic plans will result in run-rate savings of more than $200 million by 2025.
According to a spokesperson, Corteva anticipates approximately $1 billion in total "market-driven headwind costs" in 2022, including commodity and raw material costs as well as freight logistics.
Ukraine, long known as the "breadbasket of the Black Sea," saw corn, soybean, and sunflower oil exports halted following Russia's invasion earlier this year.
Corteva, a spin-off of DowDuPont's historic split in 2019, stated that more information on the review will be shared at its investor day on September 13.
It increased its net sales forecast range for 2022 from $16.7 billion to $17.0 billion, up from $16.7 billion to $17.0 billion previously. The full-year operating earnings forecast has been raised from $2.35 to $2.55 per share to $2.45 to $2.60.
Net seed sales increased 4% to $3.95 billion in the second quarter, as higher prices offset lower volumes. Crop protection sales grew by 25% to $2.31 billion. During the reported quarter, it recorded a $45 million charge related to its exit from Russia. Adjusted operating profit increased by 14% to $1.20 billion, or $1.64 per share.
