Mark A. Douglas
President and Chief Executive Officer at FMC
Thank you, Zack, and good morning, everyone. Details on our fourth quarter and full year 2023 results can be found on Slides 3 through 6. Market conditions and buyer behavior were pretty much as we had expected in the fourth quarter, with North America, EMEA and Asia performing to our plan. The one exception was Latin America.
In addition to the ongoing channel correction, our results were negatively impacted by drought conditions in Brazil. This was somewhat offset by stronger sales of our more differentiated products, which are showing continued resilience despite market conditions. Branded diamide sales in the quarter were up 5%, with sales essentially flat or higher in all regions, while products launched in the last five years outperformed the overall portfolio and comprised 14% of our total revenue.
The channel inventory correction is running its course at varying rates through the regions, and we're expecting this to continue through the first half of 2024. However, the underlying fundamentals of our business in this industry remain solid. Based on input from third-party data and our own commercial teams, crop protection products continue to be applied at steady rates.
Looking at fourth quarter sales on a regional level, North America revenue was down 37% versus prior year from lower volume as expected after a record Q4 in 2022. In Latin America, sales were down 38%, 41% excluding FX, due to lower volumes and low double-digit pricing decline. Branded diamides were essentially flat to the prior year, aided by the successful launch of Premio Star in Brazil. In addition, we had solid growth in Mexico, supported by higher sales of new products.
Fourth quarter sales in Asia were flat to prior year period as growth in fungicides and biologicals effectively offset inventory destocking, particularly in India where channel inventory remains elevated. Branded diamide sales in the region were in line with the prior year period. Revenue in EMEA was down 24% or 22% lower, excluding FX, due to lower volume, mostly in herbicides. Price was a low-to-mid single-digit benefit as the region continued to effectively implement price initiatives. Branded diamide sales experienced strong growth of more than 20% driven by the launches of Verimark in Spain and Presticor in Turkey.
Shifting to EBITDA, fourth quarter results were 41% lower than the prior year period due primarily to lower sales. Costs were a strong tailwind with contributions from lower input costs and diligent spending controlled in SG&A and R&D.
Our full year 2023 results are listed on Slide 6. EBITDA margin of nearly 22% was lower by approximately 240 basis points, but remains at industry-leading levels. This was accomplished through effective spend management and by holding or raising price in many geographies, especially in EMEA, which benefited from a price increase of lower double digits for the year. We had substantial cost favorability for the year that was more than offset by the decline in sales volume. Operating cost actions we took in the second half of 2023 in response to lower demand delivered spend reductions well in excess of our $60 million to $70 million target. Diamide sales for the full year were $1.8 billion, a decline of about 15%. However, sales of our branded diamides outperformed and were only down 7%.
Across our portfolio, the new and more innovative products showed much greater resilience even in a weak demand environment. NPI sales were down only 2% and made up a little over 13% of our total revenue, a new annual record, up from 10% in 2022. New products that drove this performance include a number of products in Brazil, such as Premio Star Insecticide for soy, Boral Full and Stone herbicides for sugar cane and soy, and Onsuva Fungicide for soy based on our new active ingredient, fluindapyr. We also benefited from sales of Coragen Max Insecticide for canola, Altacor Evo Insecticide for fruits and vegetables, and Overwatch Herbicide for cereals.
Before we move the discussion to 2024, I would like to highlight some of the actions we have taken to enhance visibility into channel inventory. In Europe, we have put surveys in place in nine of our most important countries, uncovering hundreds of distributors and growers to gain insight into their inventory and especially of our products. In Asia, the larger countries, including India, are utilizing proprietary digital platforms to track inventory movement in real time across the channel as it passes from distributor to retailer and then to grower.
In Mexico, we're in the final stages of integrating our systems with those of our retailers, which will also give us real time visibility of inventory sellouts. We are also piloting this same system and approach in Brazil. In Argentina, we have increased the frequency of data updates to our inventory tracking system. And finally, in the U.S., we are expanding our forecasting process beyond distributors to now include retailers. This expanded data set will then be incorporated into our demand forecasting processes.
Moving to 2024 expectations, our full year guidance and commentary have been provided on Slides 7 through 10. Having closed 2023 and established a starting point for 2024, we now expect revenue of $4.5 billion to $4.7 billion, an increase of 2.5% at the midpoint. We are anticipating the full year global market to be flat-to-down low-single digits as a softer first half is expected to be followed by the resumption of historical low single-digit percent growth in the second half. The exception to this forecast is India, where we expect the market to be down for the full year, primarily due to channel inventory that the entire industry is carrying as a result of multiple seasons of unfavorable monsoons.
Revenue growth for FMC in 2024 centers on volume growth led by NPI, which after posting sales of $590 million in 2023, we expect to grow by approximately $200 million in 2024. Almost half of the NPI growth is expected to come from products launched in 2024. Major products driving higher NPI sales include Coragen eVo Insecticide in Argentina and the U.S., Premio Star Insecticide in Brazil, Overwatch Herbicide in Australia, as well as Onsuva Fungicide in Brazil and Argentina. We expect moderate pricing pressure in the year, with the largest impact in the first half. FX is also expected to be a minor headwind for the year.
EBITDA is expected to be between $900 million and $1.5 billion, flat to 2023 at the midpoint. Growth of new products and benefits from our restructuring are expected to be offset by higher cost of inventory carried forward from the prior year, lower fixed cost absorption and modest pricing pressure. The updated sales range is $150 million lower at the midpoint than our preliminary outlook presented in November. This range now reflects our actual 2023 results. The EBITDA range midpoint is $100 million lower than the preliminary outlook, mainly due to the reduced revenue expectation for 2024 and minor additional headwinds to gross margin. Adjusted earnings per share is expected to be between $3.23 and $4.41 per share, an increase of 1% at the midpoint from lower interest expense and D&A.
At our November Investor Day, we acknowledged that although FMC had responded aggressively to market challenges in the second half of 2023, broader actions were needed to better align our business operations with the current realities in the marketplace. We are moving quickly on a global restructuring plan that will fundamentally transform our operating model, including how we are organized, where we operate and the way we work. This is a multi-pronged approach that focuses on shorter-term expenses and longer-term structural costs, as we restructure the operating model. These structural changes will position us for success as we move beyond 2024 and towards our 2026 goals.
Slide 9 provides some additional detail on the actions we are taking. The global restructuring program is currently underway and will largely be completed in Brazil by the end of Q1. We have also made strong progress through a voluntary separation program in the U.S. with preparations for additional workforce reductions company-wide. Combined, approximately 8% of our workforce will be impacted as we begin to consolidate roles and adjust team structures.
Reducing indirect spend is another place where we've accelerated our actions on many critical areas, including non-essential spend and implementing a new strategic sourcing strategy. We already announced plans to sell our non-cropped global specialty solutions business. We have been preparing for this over the last two months and we are now ready to begin marketing. And lastly, we are examining the company's global and regional footprint.
Our location strategy is a critical pillar in FMC's overall transformation, and we've made good progress in our analysis so far. This includes examining office locations, manufacturing sites and research centers. Although this is a longer-term work stream, there will be milestones that we will announce throughout this year. As a reminder, we expect this restructuring plan to result in $50 million to $75 million of cost savings in 2024. It's important to note that these savings are net of inflationary and other cost headwinds that we are forecasting for the year. We expect $150 million of run rate savings by the end of 2025. We plan to complete this restructuring and deliver lower costs, while continuing to prioritize investments in critical growth areas such as our Plant Health business, further engagement with growers, and R&D, including new product innovation.
Slide 10 lists some of the factors that would lead to varying EBITDA outcomes in our guidance range. The pace of recovery in the market is still the largest determinant factor. Our base assumption is that by mid year, every region will have had one full growing season to manage inventory to desired levels, aided by steady application rates by growers. Recovery may vary by region, but we expect to see overall market growth in the second half of the year.
Slide 11 provides our outlook for the first quarter. Expected revenue of $925 million to $1.075 billion is lower than the prior year by 26% at the midpoint, which is consistent with the revenue declines of the last three quarters. Volume is expected to be the primary driver of lower sales with pricing pressure in Latin America and Asia, a smaller secondary headwind. EBITDA guidance for the quarter is between $135 million and $165 million, with the decline versus prior year primarily driven by lower sales, as well as higher cost inventory carried forward from 2023.
Taking into account the first quarter guidance that is lower than the prior year period, Slide 12 provides a bridge for how we plan to achieve our full year guidance over the remaining quarters. The largest component of EBITDA growth over the second to fourth quarter period is higher sales volume of new products. Not only do these products have a strong track record of delivering sales in difficult market conditions, but they also contribute higher margins, which will positively impact mix.
We expect NPI sales to grow by over $200 million in 2024, with the majority of the growth occurring after Q1. Market recovery in the second half will also contribute to EBITDA growth, as we'll benefits from our restructuring program which will build through the year as initiatives are implemented. As you can see, we have built a plan primarily based upon elements we control and are not reliant on an outsized market recovery to achieve our guidance.
With that, I'll now turn the call over to Andrew.
