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Restricted - External FMCOVERWEIGHTAmericas AgribusinessNEUTRALPrice TargetUSD 48.00Price (04-Jun-25)USD 42.24Potential Upside/Downside+13.6%Source: Bloomberg, Barclays ResearchAmericas AgribusinessBenjamin M. Theurer+52 55 5241 3322benjamin.theurer@barclays.comBCCB, MexicoRahi Parikh+1 212 526 0150rahi.parikh@barclays.comBCI, USRyan Lavin+1 212 526 8713ryan.lavin1@barclays.comBCI, USReid Monahan+1 212 526 7506reid.monahan@barclays.comBCI, US 1https://www.reuters.com/markets/emerging/large-blast-hits-chemical-plant-chinas-shandong-2025-05-27/2025 to build inventory for a 2026 launch -therefore likely creating financial benefits for FMCduring this current fiscal year. To clarify, FMC will not be selling the active ingredient butactual products; these same final products will beofferedto the market individually as well. Fornow, FMC does not think it needs to pair with a manufacturing partner and sell the activeingredient. Compared to marketing these products on its own, FMC expects to see a similarEBITDA margin structure.With Rynaxypyr comingoffpatent at the end of the year,FMC has established its "defensivepolicy" as generics enter the market. The company expects an initial influx of new players thattrailsoffover time, with the company still maintaining a competitive position due to higherperformance compared to substitutes. At the same time, FMC plans to add a second mode ofaction to combat potential resistance or work with a mixed partner to broaden the spectrum ofcontrol and expand the addressable market.Over the next few years, management expectshigher Rynaxypyr volumes tooffsetlower pricing to drive sales growth with relatively flatgross profit dollars compared to 2025. Cyazypyr is placed in the Growth Portfolio, with patentprocess protection until 2028/29 and branded sales growth expected in 2025. Cyazypyr also haspotential to develop high-performing formulations.Amid the broader competitive landscape,FMC does not see opportunities for M&A orconsolidation within the major five players (BASF, Bayer, CTVA, Syngenta, and FMC)as EUregulators seem to push back once the market that is dominated by four players or less.Currently, the focus remains on its new product portfolio, whose crop diversity will allow thecompany to expand its reach in each key geography. Another potential consolidation avenue forexpansion could be a commodity-based player or a technology company.Regarding aChinese facility explosionthat occurred May 27th, FMC's operations were notimpacted. Following such events and especially one with fatalities, Chinese authorities tend toinspect all factories that produce similar products. FMC has already conducted inspections andre-opened the plant. However, authorities are inspecting other generic players' factories andthe outcome of investigations could be in favor of FMC if competitor facilities are forced toremain closed. Timelines for these inspections and potential closures vary.1Finally, FMC's recent hybrid debt issuance,totaling $750mn for a 30-year period at a high8.45%, is set to improve its credit profile bridging temporary pressures due to lower EBITDA.This bond is expected to be debt neutral on FMC's financial docs according to management andallocated to payoffdebt and other corporate purposes. However, this would increase interestexpense (not included in guidance) even with some debt pay-down. Management believes thisissuance is the best way to maintain its investment grade credit rating, especially as ratingagencies see this as a 50-50 equity and debt, with outlookaffirmedas negative by . The debtissuance is critical for the company's operations given the high working capital needs, ability toaccess commercial paper, move cash arounddifferentgeographies, and low tax rate. If FMCdelivers on its operations and EBITDA guidance in the coming years, management stated thatthey could refinance at no risk at a lower coupon starting in five years. Moreover, FMC iscomfortable with its current covenant and believes it can reach more normalized leverage levelsin 2027 upon EBITDA expansion. This EBITDA growth should also help fix cash flow and thedividend payout ratio.We reiterate our OW rating. Shares are trading below its historical EV/EBITDA, ie at 10x for 2025vs normalized 12-13x. We see progress in its inventory issue - with our expectation for LatAm torecover in 2Q25 - and continuedeffortin India, which has become a less relevant market.2 Analyst(s) Certification(s):I, Benjamin M. Theurer, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of thesubject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to thespecific recommendations or views expressed in this research report.Important Disclosures:Barclays Research is produced by the Investment Bank of Barclays Bank PLC and itsaffiliates(collectively and each individually, "Barc