Corteva raises forecast as demand for seeds, crop protection products booms

© Reuters. The logo and trading info for Corteva Agriscience, a former division of DowDuPont, is displayed on a screen at the New York Stock Exchange (NYSE) in New York, U.S., June 3, 2019. REUTERS/Brendan McDermid

By Ruhi Soni

(Reuters) -Corteva Inc on Thursday raised its full-year sales and profit forecasts as the crop protection products maker benefits from surging demand from farmers looking to cash in on higher prices since the Ukraine war.

The company, which reported a 14% jump in second-quarter operating earnings, also unveiled plans to exit some non-core geographies and product lines as part of a previously announced strategic review.

Corteva (NYSE:CTVA) said it is "right-sizing and optimizing its cost structure" as part of the plan and expects to record related charges of about $400 million through the second quarter of 2023, roughly half of which represents cash payments.

The agricultural chemicals company said it expects run-rate savings of over $200 million by 2025 from the strategic plans.

Corteva expects about $1 billion in total "market-driven headwind costs", including commodity and raw material costs as well as freight logistics, in 2022, a spokesperson said.

Ukraine, long considered the "breadbasket of the Black Sea", saw exports of corn, soybean, and sunflower oil blocked following Russia's invasion early this year.

Corteva, a spin-off of DowDuPont's historic split in 2019, said further information on the review will be shared during its investor day on Sept. 13.

It raised its 2022 net sales forecast range from $17.2 billion to $17.5 billion, from $16.7 billion to $17.0 billion earlier. Full-year operating earnings forecast was lifted to $2.45 to $2.60 per share from $2.35 to $2.55.

Second-quarter net seed sales grew 4% to $3.95 billion as higher prices offset lower volumes. Crop protection sales increased 25% to $2.31 billion.

It recorded a $45 million charge related to its Russia exit during the reported quarter. Adjusted operating profits rose 14% to $1.20 billion, or $1.64 per share.