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Why FMC’s Health and Nutrition Segment’s Revenue Fell in 2Q16

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Aug. 11 2016, Updated 11:04 a.m. ET

Health and Nutrition segment’s revenue

In 2Q16, FMC Corporation’s (FMC) Health and Nutrition segment reported revenue of $195 million, representing 24.1% of FMC’s total revenue. The company’s Health and Nutrition segment is its second-largest revenue generator.

On a year-over-year (or YoY) basis, the segment’s revenue fell by 5.6%. During 2Q16, the Health and Nutrition segment posted operating income of $44.9 million, compared to $50.5 million in 2Q15. This implies a fall of 11.1% in operating income YoY.

FMC’s Health and Nutrition segment recorded an operating margin of 23% in 2Q16, compared to 24.4% in 2Q15. This implies that the segment’s operating margin fell by 1.4 percentage points YoY. The fall was mainly attributed to weaker sales of the segment’s Omega-3 product.

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Other highlights in the Health and Nutrition segment

  • Lower sales volumes, particularly of Omega-3, impacted the segment’s operating income by -7.9%.
  • Higher operating costs impacted operating income by -5.9%.
  • Favorable pricing improved operating income by 2%.

Health and Nutrition segment outlook

  • FMC lowered its 2016 income guidance for the segment to the range of $190 million–$196 million, compared to its earlier guidance of $198 million–$208 million.
  • The company expects the segment’s 2016 revenue to be in the range of $750 million–$800 million.
  • FMC expects the segment’s operating margin to be around 25% in 2016.
  • FMC expects the segment’s 3Q16 income to be in the range of $44 million–$48 million.

As of August 8, 2016, the iShares Russell Mid-Cap Growth ETF (IWP) held 0.2% of its total holdings in FMC. The other holdings of this ETF include Valspar (VAL), ConAgra Foods (CAG), and Vulcan Materials (VMC) with weights of 0.3%, 0.6%, and 0.5%, respectively.

In the next article, we’ll look into the performance of FMC’s Lithium segment in 2Q16.

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