FMC Slashes Dividend. The Stock Was Nearly Cut In Half.

FMC makes crop protection chemicals for farmers. Coming into Thursday trading, FMC stock was down about 40% this year. (PHILIPPE LOPEZ/AFP via Getty Images)

Key Points

• FMC reported adjusted earnings per share of 89 cents on sales of $961 million, exceeding earnings estimates but missing sales projections.
• FMC reduced its quarterly dividend to 8 cents from 48 cents to prioritize debt repayment, causing shares to drop.
• The company ended the quarter with $4.5 billion in total debt, with a projected 2025 EBITDA of $850 million, leading to a debt-to-EBITDA ratio above 5 times.

Farm input provider FMC reported better-than-expected third-quarter earnings. That’s the good news. The bad news: FMC slashed its dividend to 8 cents a quarter from 48 cents. Shares plunged on Thursday.

Wednesday evening, the crop protection chemical maker announced adjusted earnings per share of 89 cents from adjusted sales of $961 million. Wall Street was looking for 85 cents from sales of $1.1 billion.

Shares lost 46.7%, closing at $15.53. The S&P 500 and Dow Jones Industrial Average fell 1% and 0.2%, respectively.

Sales missed estimates. Unadjusted sales were $542 million, accounting for a business sale in India. Sales disappointment isn’t why the stock is down so much. That’s mainly on the dividend, which was reduced to prioritize debt repayment.

“Over the last 18 months, we have made hard decisions to position the business for recovery and to streamline our operating model,” said CEO Pierre Brondeau. “To further prioritize cash generation and debt reduction, the FMC Board of Directors has made the decision to reduce the dividend. We continue to believe our pipeline of new active ingredients is our true differentiator, and it remains the growth engine of the company.”

The company ended the quarter with about $4.5 billion in total debt. Management expects earnings before interest, taxes, depreciation, and amortization, or Ebitda, to be about $850 million in 2025, below Wall Street’s projection of $911 million. That puts the company’s debt-to-Ebitda ratio north of 5 times. Industrial companies in the S&P 500 typically operate below 2 times.

The cut “will free up $250 million [annually] that can be used to pay down debt,” wrote Gordon Hasket analyst Don Bilson, adding that another thing cut was Ronaldo Pereira’s role as president of the company.

“He is a 52-year-old who was promoted in June of 2024 when the board bounced Mark Douglas as CEO and gave his seat to FMC’s former CEO, Pierre Brondeau,” added Bilson. “The 67-year-old Brondeau will now have to come up with a new succession plan at the same time he is redesign[ing] FMC’s manufacturing footprint.”

Before the dividend cut, FMC stock was yielding about 6.6%. Now, shares are yielding closer to 2%.. The average dividend payer in the S&P 500 yields about 2.3%.

It’s been a tough year for the stock. Coming into Thursday trading, FMC stock was down 40% this year, hurt by falling farmer income and weak agriculture commodity prices.

“The outlook for FMC looks quite dire,” wrote Citi analyst Patrick Cunningham in a Wednesday report. Fourth quarter “earnings guidance slashed to $285 million, well below $357 million consensus, as it appears the volume [increase] is more muted and pricing adjustments larger in the key growing regions.”

He rates shares Hold and has a $34 price target for the stock.

Overall, 43% of analysts covering the stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $41 a share.

Those targets will likely be coming down.

Write to Al Root at allen.root@dowjones.com