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FMC Corp. Reports Operating Results (10-Q)

November 02, 2011 | About:
10qk

10qk

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FMC Corp. (FMC) filed Quarterly Report for the period ended 2011-09-30.

Fmc Corp. has a market cap of $5.61 billion; its shares were traded at around $78.35 with a P/E ratio of 15 and P/S ratio of 1.8. The dividend yield of Fmc Corp. stocks is 0.8%. Fmc Corp. had an annual average earning growth of 9.5% over the past 10 years.

Highlight of Business Operations:

Revenue of $862 million for the three months ended September 30, 2011 increased $117 million or 16 percent versus the last year when excluding the approximate $28 million impact of revenues from the exited phosphate and sulfur derivatives businesses in Spain during 2010. Revenue increased in all businesses and in all regions. A more detailed review of revenues by segment are discussed further on under the section titled "Results of Operations". On a regional basis - adjusted to exclude exited businesses discussed above - sales in Europe, Middle East and Africa increased 16 percent, sales in Asia were up 23 percent, sales in Latin America grew 26 percent and sales in North America were up 5 percent.

Other income (expense), net is comprised primarily of last-in, first-out (“LIFO”) inventory adjustments and certain employee benefits, including incentive compensation. Our business segments account for their inventory utilizing a first-in-first-out ("FIFO") basis of accounting. The LIFO inventory adjustments are not allocated to the business segments and therefore are recorded to "Other income (expense), net". Other expense decreased to $2.9 million in the third quarter of 2011 from $3.5 million in the same period of 2010. The third quarter of 2011 was positively impacted by $2.3 million due to the favorable impact of the mark to market of our deferred compensation liability which represented a charge of $1.2 million in the third quarter of 2010. This reduction in other expense was partially offset by a charge related to an increase in our LIFO inventory reserve of $1.4 million which for the three months ended September 30, 2010 was income of $2.9 million. Other income (expense), net is included as a component of the line item “Costs of sales and services” on our condensed consolidated statements of income.

Segment operating profit of $112.5 million increased approximately 19 percent versus the year ago period primarily as a result of the higher pricing documented above. The exited phosphate and sulfur derivative businesses added $0.7 million of segment operating earnings in the nine months ended September 30, 2010. Additionally, the startup costs associated with our Granger soda ash facility were offset by favorable production efficiencies in Alkali. Selling, general and administrative costs increased 11 percent or $4.1 million primarily for targeted growth initiatives.

Other expense increased to $15.1 million in the nine months ended September 30, 2011 from $5.6 million in the same period of 2010. The increase was primarily due to expense related to an increase in our LIFO inventory reserves in 2011 of $4.1 million versus 2010 where we had income of $8.7 million, resulting in a period-to-period change of $12.8 million. Additionally, the first nine months of 2010 was positively impacted by $1.5 million due to the favorable impact from the mark to market of our deferred compensation liability which did not recur in the same period of 2011. Other income (expense), net is included as a component of the line item “Costs of sales and services” on our condensed consolidated statements of income.

Energy costs are approximately nine percent of our cost of sales and services and are diversified among coal, electricity, and natural gas. We attempt to mitigate our exposure to increasing energy costs by hedging the cost of future deliveries of natural gas and by entering into fixed-price contracts for the purchase of coal and fuel oil. To analyze the effect of changing energy prices, we have performed a sensitivity analysis in which we assume an instantaneous 10 percent change in energy market prices from their levels at September 30, 2011 and December 31, 2010, with all other variables (including interest rates) held constant. A 10 percent increase in energy market prices would result in a decrease in the net liability position of $3.0 million at September 30, 2011, compared to a $3.4 million decrease of the net liability position at December 31, 2010. A 10 percent decrease in energy market prices would result in an increase of $3.0 million in the net liability position at September 30, 2011, compared to an increase of $3.4 million of the net liability position at December 31, 2010.

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