Replies to post #8853 on The Rising Influence of Rising Affluence

[DewDiligence]

MON and SYT, who benefit from the expanded crop acreage that typically accompanies low crop prices, are thereby much less affected by low crop prices than equipment vendors such as DE and AGCO. In my opinion, however, DE’s low P/E already factors in the continuation of low crop prices for a few years.

I’m long MON, DE, and SYT.

[DewDiligence]

Addendum to #msg-106672980: DE still maintains it can attain $50B in sales in 2018, a prediction that was made in 2011 (#msg-60344244). With a down year in 2014, it’s going to harder to get there, but I wouldn’t rule it out.

[DewDiligence]

AGCO lowers EPS guidance (again):

http://online.wsj.com/articles/agco-pares-guidance-again-and-plans-cutbacks-1412686946

Agco Corp. again cut its guidance as the farm-machinery maker planned to scale back production and costs amid weak sales across all of its regions. The company now expects its per-share earnings for the year to be $4.10 to $4.30, down from its previous outlook of $5 a share. It had previously cut its outlook in July.

“During the third quarter, we experienced weaker than anticipated levels of demand and are responding by making more aggressive cuts in production schedules and expenses,” Chief Executive Martin Richenhagen said in a news release.

Today could be a tough day for DE.

[DewDiligence]

USDA program helps younger farmers get started:

http://online.wsj.com/articles/young-farmers-emerge-as-the-new-sharecroppers-1415646900

[DewDiligence]

Barron’s likes FMC, a restructured chemicals company with an increased focus on agriculture:

http://online.barrons.com/articles/fmr-shares-could-jump-50-1418439519

In September, FMC, a big maker of pesticides, surprised investors with a major change in plans. The company said it would pay $1.8 billion for Cheminova, the pesticide unit of a Danish chemical maker, Auriga Industries, and scrap previously announced plans to spin off its minerals business. Instead of the spinoff, FMC will sell most of the minerals segment to finance the acquisition.

…The addition of Cheminova and the Alkali Chemicals divestment will boost FMC’s agricultural chemicals business to 77% of sales, from 55%... The purchase will broaden FMC’s product line in fungicides, and add to its strong position in insecticides and herbicides. Including Cheminova will also expand the company’s presence in Europe and Latin America.

…In its pesticide business, FMC has carved out an attractive niche by focusing on selling fungicides, insecticides, and herbicides for crops that are often overlooked by industry heavyweights… Those include cotton, sugarcane, fruits and vegetables, and rice. The division draws 75% of its revenue outside of North America, with Latin America contributing the majority.

…Since 2010, when Brondeau, the former president of chemical maker Rohm & Haas, was named CEO, FMC has turned itself into a higher-growth, higher-margin chemicals business focused on agriculture and health-and-nutrition products. Revenue has risen 40% during his tenure, and return on invested capital is an enviable 18%.