In the third quarter ending September 30, 2023, Corteva's net sales decreased 7% compared to the same period last year. Organic sales fell 13%. Volume was down 15% year-over-year, driven by strategic product exits and continued headwinds in the crop protection segment. There was a change in the assessment of Brazil (see at the end of this article).
According to the company, lower seed volumes were driven by the timing of seasonal demand in Latin America and an earlier operational end of the season in North America compared to the previous year.
Prices increased 2% year over year, reflecting continued execution of the company's value pricing strategy while managing increased competitive pressure.
Net seed sales were US$878 million in the third quarter of 2023, up from US$862 million in the third quarter of 2022. The result, the company reports, "was driven by a 14% increase in price, partially offset due to a 12% drop in volume".
The price increase was widespread, driven by strong demand for cutting-edge technology products and strong operational execution across the portfolio. Lower volumes were driven by lower expected planted area and delayed purchases from farmers in Brazil, and an earlier operational season closure in North America compared to the previous year.
The segment's operating EBITDA was a loss of US$138 million in the third quarter of 2023. According to Corteva, "pricing execution, reduced net royalty expenses and ongoing cost and productivity actions more than offset the increase of input and freight costs, lower volumes and the unfavorable impact of currency.”
Net seed sales were $7,8 billion in the first nine months of 2023, up from approximately $7,3 billion in the same period in 2022. The increase in sales was driven by a 14% increase in price and a favorable impact of 1% of the portfolio. This gain was partially offset by a 5% drop in volume and an unfavorable currency impact of 3%.
The price increase was driven by strong demand for cutting-edge technology and operational execution around the world, with global corn and soybean prices rising 15% and 8%, respectively. Price actions more than offset currency impacts in EMEA.
The decline in volume was driven by the decision to exit Russia in 2022, lower corn acreage in EMEA and lower-than-expected projected corn acreage in Brazil, partially offset by increased corn acreage in North America. Unfavorable currency impacts were led by the Turkish Lira and the Canadian Dollar.
The segment's operating EBITDA was US$1,97 billion in the first nine months of 2023, an increase of 24% compared to the same period last year. Pricing execution, reduced net royalty expenses and ongoing cost and productivity actions more than offset higher input and freight costs, lower volumes and unfavorable currency impact. The segment's operating EBITDA margin improved by more than 350 basis points compared to the same period last year.
Crop protection net sales were approximately $1,7 billion in the third quarter of 2023 ($1,9 billion in 2022). The sales decline was driven by a 16% reduction in volume and a 4% reduction in price, partially offset by a 7% favorable impact from "Biologicals" acquisitions and a 2% favorable currency impact.
The decrease in volume was driven by strategic product exits, inventory reduction trends, timing of seasonal demand and delays in farmer purchases, impacting volumes in all regions. Price gains in EMEA and Asia-Pacific were offset by price declines in North America and Latin America, driven by heightened competitive pressure. Favorable exchange rate impacts were led by the Brazilian real and the euro. The portfolio impact was driven by the "Biologicals" acquisitions, which added approximately $145 million to net sales.
The segment's operating EBITDA was $184 million in the third quarter of 2023, a 48% drop compared to the third quarter of 2022. Volume and price declines and higher input costs more than offset productivity actions. The segment's operating EBITDA margin decreased approximately 760 basis points compared to the same period of the previous year.
Crop protection net sales were approximately $5,7 billion in the first nine months of 2023 ($6,3 billion in the same period of 2022). The drop in sales was driven by a 16% reduction in volume and an unfavorable currency impact of 2%. These declines were partially offset by a 4% price increase and a 4% favorable impact from Biologicals acquisitions.
The segment's operating EBITDA was US$1,1 billion in the first nine months of 2023, an 18% drop compared to the same period last year. Pricing enforcement and productivity actions were more than offset by lower volumes, higher input costs and the unfavorable impact of the currency. The segment's operating EBITDA margin decreased approximately 200 basis points compared to the same period of the previous year.
The global outlook for agriculture remains broadly positive in 2023, with high demand for cereals and oilseeds. Raw material prices are above historical averages and farm balance sheets and yield levels remain generally healthy, encouraging producers to prioritize technology to maximize returns.
The company's outlook for its operations in Brazil was revised, influenced by "the lower-than-expected corn acreage, continued headwinds in agricultural chemicals, delays in farmers' purchases for both plantings and crop protection applications, as well as as well as high levels of generic products", leading to an update of sales and net profit expectations for the year 2023 in October 2023.
Corteva expects net sales in the range of $17,0 billion to $17,3 billion, down 2% from the previous year.
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