Corteva Inc. on Wednesday reported upbeat 2024 guidance as the crop protection company predicts expansive demand for new seeds and other products.
Cash flow for 2023 exceeded Corteva's expectations in part due to "strong demand for our innovative seed technology," CEO Chuck Magro said in an earnings call. While inventory destocking issues continue, conditions should improve this year and bolster company performance moving forward.
Despite reporting a fourth quarter loss of $231 million, Corteva shares surged after the report dropped, underscoring investor confidence in the company’s sales and 2024 outlook.
As farmers continue to face issues related to weather and crop disease, breakthrough innovations in agriculture technology, seed development and crop protection products are expected to drive growth for Corteva and peers.
While farm income remains relatively high, Magro said farmer demand for technologies and “seeds that maximize yields” will remain steady and unchanged.
Corteva had more than 400 new product launches in 2023, including 300 new seed hybrids and varieties. The company forecasts its seed unit to remain strong this year "as farmers continue to look to effective technology to boost yields, while offsetting the effects of climate change and increasing pest pressures," Magro said.
The agriculture chemical and seed company is also optimistic about the potential for technologies like gene editing, which Magro said will speed up innovation.
Despite the upbeat outlook, price pressures still dampened sales particularly in the crop protection unit. Inventory destocking and extreme weather issues in South America also ate into recent earnings and led to a downward guidance revision in October.
With farmer incomes relatively high, Magro said demand should carry the company through 2024 as conditions improve.
“We should expect to see another year of meaningful margin expansion with a heavy focus on cash generation,” he said.
Following news of Corteva’s latest financial performance, company shares surged 25% to peak at $56.59 on the New York Stock Exchange. They have since come down to around $53.
Fourth-quarter sales for the company totaled $3.7 billion, a 3% decline from the previous year. The results were also higher than analyst estimates, representing a 4% surprise in terms of revenue growth, according to Zacks Equity Research.
Julie Hyman, a newscaster with Yahoo Finance!, said in a broadcast that Corteva’s shares saw a big slump last year, but the fundamentals point to farm demand being steady and strong.
“It looks like what investors are betting on now is sort of a recovery narrative here,” she said.