Livent Corp (LTHM)

[TradingCharts]

FMC - The Birth Of A Dividend Challenger?




•FMC more than doubles quarterly dividend to $0.40.

•New shareholder remuneration program outlined at Investor Day 2018.

•If FMC can meet its mid-term targets, there is plenty of room for continued double-digit dividend growth.


On December 3, FMC Corporation (FMC) outlined a five-year strategic plan at its Investor Day which comprises a new capital allocation program of up to $4.5B. This amount is quite substantial as it corresponds to more than 40% of the company’s current market cap of $10.3B. The majority (up to $3.2B) will be spent on share repurchases which leaves $1.3B for dividend payments.

FMC has been a company in transformation for several years. With the recent separation of the lithium business and the IPO of Livent (LTHM), the process will likely come to an end in March 2019 when FMC plans to distribute its 85% Livent stake to shareholders. A few years ago FMC used to be a chemical conglomerate, but it is now a pure agrochemical company and also one of the top players in the industry. With estimated sales of $4.2B in 2018, FMC Agricultural Solutions ranks number five globally, up from the ninth place (with sales of $2.2B) in 2014.

Only time will tell, but it appears that FMC made the right strategic moves at the right time. The company has continuously invested in the agrochemical segment and divested other businesses. With the Cheminova acquisition in 2015 and the purchase of the DuPont business in 2017, FMC’s footprint has increased significantly – both geographically and portfolio-wise.

I assume that the timing for exiting the lithium business isn’t bad either. The segment’s top and bottom line grew strongly over the last few years, fueled by the growing demand for batteries. The long-term outlook remains promising, but it is probably more uncertain as it used to be because the anticipated EV boom has attracted large investments. All established producers as well as several newcomers are working on large projects which will significantly increase production over the next years. This leads to the question whether all new capacity will be needed or if it will come to oversupply and price pressure. Livent is as committed to growth as the other players are which means it will require further large capital expenditures in the coming years.

https://seekingalpha.com/article/4229642-fmc-birth-dividend-challenger