Chuck Magro
Chief Executive Officer at Corteva
Thanks, Kim. Good morning, everyone, and thanks for joining us. I hope your year is off to a great start.
There are several key points I'd like to share with you today, including a perspective on our Q4 results, an overview of current market fundamentals with a closer look at what that might mean for us in 2025 and how to connect all of that to our 2027 financial framework that outlines our path to sustained value-creation over the next three years.
Let me start by saying that we finished 2024 almost exactly as we thought we would. The ag fundamentals have continued to improve, more so than over the past two years. So our 2025 guidance reflects that. Our portfolio of advanced seed and crop protection technologies is in high-demand, and we feel-good about our path to delivering the 2027 financial framework, which we announced in November. Coupled with productivity and cost-improvement initiatives, a central pillar of our business strategy, we delivered 20% operating EBITDA margins for the first time in 2024, all while maintaining operating EBITDA, which ended-up being about flat year-over-year in less than ideal market conditions.
To ensure we had good momentum coming into 2025, it was important that we finished the year strong, which we did, particularly in Crop Protection where we drove double-digit organic sales growth and 800 basis-points of margin improvement in the 4th-quarter, which was largely attributable to demand for our technology in Brazil.
Our seed business consistently delivered in 2024 with Pioneer maintaining its rank as the number-one corn and soybean brand in the US. We gained corn market-share in North-America, coupled with solid pricing. This was quite an accomplishment given the reduction in corn planted area. In list E3 soybeans, the number-one selling soybean technology in the US has reached 65% market penetration, thanks to so many other companies licensing Enlist traits for their own products.
The Enlist system, including our herbicide offerings reached $1.9 billion in sales in 2024, still growing despite a well-supplied market. On the crop protection side, new products in delivered double-digit volume gains in 2024 and on biologicals, mid-single-digit volume increases in 2024 are expected to continue to strengthen in 2025 due to ongoing demand recovery and continued penetration across all regions. Between strong demand for our innovative seed technology, cost and working capital discipline as well as healthier farmer income levels in North-America, our operating free-cash flow-in 2024 improved by almost $500 million, coming in at about $1.7 billion. We also returned approximately $1.5 billion to shareholders via dividends and share repurchases for the full-year. We are committing to another $1 billion in share repurchases in 2025.
So in summary, 2024 was a year of progress in less than ideal conditions. Seed continues to deliver great growth as we transition to a net technology seller. And although the crop protection industry had another down year, the strength of our portfolio and our 4th-quarter performance in Brazil gives us confidence that things are moving in the right direction.
Now let's take a step-back to discuss the current macro-environment before diving into the specifics for Corteva in 2025. As I mentioned, overall ag fundamentals remain constructive as evidenced by record global consumption of both corn and soybeans. Large global crops enjoyed record demand for grains, oilseeds and biofuels in 2024 and the demand outlook into '25 indicates that growth will continue for livestock feed, biofuel and food consumption. Strong production has helped farm sector income.
We had record corn yields in the US and expect to see the same in Brazil, which allows farmer margins in both of those key markets to improve meaningfully. While grain prices are on the rebound and US farmers posted back-to-back record corn yields the past two years, more notable is the fact that the corn market is tight. Measured by global stocks-to-use ratios, it's the tightest they've been globally in over a decade. And if you exclude China, it's the tightest we've seen in three decades. And with on-farm demand remaining strong overall, we're seeing signs of stabilization in the crop protection industry. For example, pricing for products coming out of China has been stable over the past few months and channel inventory levels around the world are more in-balance.
For Corteva, improvement has come in the shape of three consecutive quarters of volume gains. This all gives us confidence in our 2025 assumption of a flattish market with low single-digit volume gains, offset by low-single-digit pricing headwinds. With regard to 2025, although our operational plan remains intact, today, we are refining our preliminary '25 view to reflect additional currency headwinds, namely the Brazilian real and to a lesser extent, the Canadian dollar. The strong US dollar will impact the agricultural economy throughout 2025 and due to the crops and geographies in which we participate will impact our US dollar reported results. However, we are still expecting another year of top and bottom-line growth and meaningful margin expansion with continued laser-focus on controllables, including the initial tranche of feed cost deflation.
You might recall that in our 3rd-quarter earnings call, we pointed to $550 million in gross cost and sales improvements in 2025 and that assumption remains. Benefits from our self-help actions, including an additional $50 million related to royalty improvement gives us the ability to continue to invest in R&D and future innovation. Our plan reflects about 10% EBITDA growth and about 100 basis-points of margin improvement. We foresee another year of strong cash-flow generation and plan to execute $1 billion in share repurchases over the course of 2025.
Now let's spend a few minutes on key themes and market assumptions for this year. To set the stage, think about strong demand for crops, improving farmer margins, good on-farm demand for seed and crop protection in more corn area in the US. The farmer is responding to positive relative economics and '25 is setting up to be the year of corn in the ag markets. We expect our seed business to have another strong year as farmers continue to look to effective technology to boost yields while offsetting the effects of volatile weather and increasing pest pressures. It should also be a standout year for seed margin improvement driven by mix uplift, royalty, income improvement and cost-of-sales benefits, including productivity and deflation. We plan to launch another 300 new seed hybrids and varieties.
Our seed pipeline is the best-in the industry. The incremental yields from the advanced technologies in our portfolio allow us to continue our long-standing price for value strategy. Our strategy of selling technology is visible and the opportunity set there is significant. The big question is, what assumptions did we make for crop protection? Well, the short answer is that the midpoint of our range assumes a flattish CP market. We have seen volume trending in the right direction. It comes down to when the pricing environment will stabilize. Given what we know today, this seems to be the most reasonable assumption for the time-being and we'll continue to update the market as conditions evolve.
For our crop protection business, we're expecting mid-single-digit organic sales growth overall, led by new products in Spinozans as well as Biologicals double-digit growth. If you recall, we're targeting $1 billion in biologicals revenue by the end-of-the decade. Geographically, Brazil will remain a key growth market for us in 2025 for both businesses. On-top of our existing strong corn market-share, it will be another important year for us to continue to make inroads with Conquesta on the soybean side. And for Crop protection, we have a robust plan for more biologicals expansion and strengthening our commercial presence.
Before I turn the call over to David, let me remind you about the announcements we made at our November Investor Day where we introduced a new straightforward framework to create value through 2027. Recall, we're targeting $1 billion in incremental net revenues over the '25 to '27 period from three growth platforms, increased out-licensing income, continued ramp-up of CP new products and biologicals growth. We're making investments in other growth areas, but these are the three that will provide the most significant incremental value capture in the mid-term. Second, we laid out Phase-2 of our controlling the controllables program that entails $1 billion in gross productivity, cost and deflation benefits across seed and crop protection as well as managing SG&A.
Next, as part of our ongoing commitment to commercial execution, we're targeting about 100 basis-points of EBITDA margin growth per year. That works out to be over 900 basis-points of improvement versus where we began in 2019. So if you play all this forward to 2027, we're expecting EBITDA growth of $1 billion over three years, which is a 9% CAGR with EBITDA margins of 23% to 24% at the midpoint. We are energized by this plan and our first task is to execute a strong 2025.
With that, I'd like to turn the call over to David.
