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FMC Management Discusses Q2 2012 Results - Earnings Call Transcript

Sales in Europe, the Middle East and Africa, or EMEA, decreased slightly less than 4%, reflecting principally the impact of a weaker euro. Gross margin of $341 million increased by $42 million or 14% versus last year.

Gross margin percent of 37.7% improved by 88 basis points over last year, driven by higher selling prices, higher volumes and improved mix, only partially offset by higher cost. SG&A and R&D of $148 million increased $18 million, or 14%, largely due to increased spending on targeted growth initiatives. Adjusted earnings before interest and taxes of $127 million increased $16 million, or 15%, compared to last year.

Let's now take a more detailed look at the performance of each of our operating segments in the quarter. First, in Agricultural Products. Second quarter sales of $394 million increased 19% versus the prior year quarter, with substantial sales gain in Latin America and North America. Latin America sales growth was driven by continued strength in sugarcane, growth in soybeans and sales from a new market access joint venture in Argentina.

North America showed strong demand for proprietary herbicides and higher insecticide sales due to strong test pressure and growth in the corn segment. Asia and EMEA sales were marginally down versus the prior year period.

Segment earnings for Agricultural Products of $111 million increased 18% versus the year-ago quarter, driven by strong volume growth, partially offset by higher spending on targeted growth initiatives. Another development of note for Agricultural Products Group in the quarter was the reapproval of bifenthrin for use in the European Union by the Standing Committee on the Food Chain and Animal Health. Bifenthrin has long been recognized as a valuable and effective crop protection product by growers around the world. It is a unique, versatile insecticide that works quickly on a range of destructive insects. It will once again be available to growers in the EU, where it will be registered for oilseed rape, cereals, vegetables, ornamental and other uses. FMC will also continue to develop new and innovative formulations for this product, which should lead to increased sales and market shares in key EU markets. Though we are very excited about this news, due to the time line to register bifenthrin across target countries in the EU, we do not expect any sales or EBIT impact until 2014.

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