David L. Begleiter
Analyst at Deutsche Bank Aktiengesellschaft
Thanks, Chuck, and welcome, everyone, to the call. Let's start on Slide seven, which provides the financial results for the quarter. As Chuck said, and you can see from the numbers, we've had a strong start to the year. Compared to the first quarter of 2022, organic sales increased 10% with gains in both segments, led by North America and EMEA. Global pricing was up 14%, with good price execution in both seed and crop protection. The pricing included management of currency headwinds, primarily in Central and Eastern Europe. Volumes for the quarter are down as expected, reflecting the strategic portfolio actions in the exit from Russia. In total, for the quarter, these exits represent $190 million or a 4% headwind.
Feed volumes were down largely due to tight supply and drought conditions in Latin America, coupled with our exit from Russia. Crop Protection volumes were down 1% in the quarter versus prior year, with new product growth offset by unfavorable weather conditions in Latin America, in Asia Pacific and our previously announced product exits. The strong top line performance translated into operating EBITDA of more than $1.2 billion for the quarter, an increase of 18%. Pricing, product mix and productivity more than offset higher input costs and currency headwinds, driving more than 260 basis points of margin expansion.
Let's now go to Slide eight, where you can see the reported sales by business. Seed net sales were up 7% in the quarter to $2.7 billion. Organic sales were up 10% on strong price execution as we continue our strategy to price for value and also offset higher input costs. We delivered pricing gains in every region, led by EMEA, which more than offset currency headwinds in that region. Feed volumes were down 7% versus prior year, with volume up in North America driven by soybean delivery timing and in APAC, driven by demand for new technology.
These gains were more than offset by volume declines in Latin America and EMEA, and EMEA seed volumes were down as expected due to our 2022 decision to exit Russia, coupled with lower corn planted area. Now excluding the Russia impact, seed volume would have been down 4% in the quarter. Declines in Latin America seed volumes were largely driven by a shortened Brazilian safrinha season, due to delayed soybean harvest and supply constraints in the region as well as the strength of Brazil's fourth quarter 2022. As you'll recall, growers in Brazil accelerated purchases last year with concerns regarding product availability and supply. Crop Protection net sales were up 5% compared to the prior year to $2.2 billion.
Organic sales were up 10% in the quarter driven by broad-based pricing gains, reflecting pricing for the value of our differentiated technology as well as to offset higher raw materials globally and currency in EMEA. Crop Protection volumes were down 1%, impacted by an approximate $90 million headwind from our strategic portfolio actions, notably the exit of commodity glyphosate and our exit from Russia. Crop Protection was up 3%, excluding the impact of these exits.
Continued penetration of new products added $140 million of incremental net sales growth as customer demand for Enlist and Arylex herbicides was strong in the quarter. Currency headwinds on both business units was 5%, largely driven by European currencies. And finally, you'll recall we closed on the Biologicals acquisitions on March 1, which added approximately $19 million of sales in the quarter. With that, let's go to Slide nine for a summary of the first quarter operating EBITDA performance. Operating EBITDA increased more than $190 million to $1.23 billion. Pricing and product mix driven by customer demand for yield advantage technology more than offset higher cost and currency headwinds.
We incurred approximately $360 million of market-driven inflation [Indecipherable] across both businesses in the quarter. Feeds saw higher commodity costs and yield impacts from dry weather in EMEA and Latin America. Crop protection raw material costs were up 7% versus prior year as we sold through higher cost inventory. And we delivered approximately $75 million in productivity savings, which partially offset these headwinds. SG&A as a percent of sales was down 140 basis points compared to the first quarter of the prior year as we maintain disciplined spending in execution on cost actions and also reflects the timing benefit of commissions expense.
Investment in R&D was up roughly $50 million in the quarter, aligned with targeted spend increases to support our leading position in ag technology. Now you can learn more about the R&D pipeline and technology investments at our R&D innovation update call on May 9. Kim is going to provide more details on that at the end of this call. Now portfolio and other gains in the quarter were driven by $7 million of EBITDA from the Biologicals acquisitions in the month of March as well as a favorable impact from the absence of the premeasurement of an equity investment, which was sold in the first half of 2022.
Currency was $172 million headwind driven primarily by European currencies. Turning to Slide 10. I want to provide an update on our full year guidance. The set-up for Corteva in 2023 remains positive, and we're raising our full year revenue, earnings and cash flow guidance. Now changes to the guidance are driven by the inclusion of the Biologicals acquisitions as well as some favorability from the strong operational performance in the first quarter, which is also included in the full year outlook. We now expect net sales to be in the range of $18.6 billion to $18.9 billion or 7% growth at the midpoint.
This includes approximately $450 million of additional sales in Biologicals. Operating EBITDA is now expected to be in the range of $3.55 billion to $3.75 billion, an increase of $150 million over our original full year guidance. At the midpoint, the updated range represents a 13% increase over prior year and it includes approximately $90 million from the acquisitions, net of roughly $20 million of integration costs. And importantly, as we're starting to see our strategic portfolio actions translate into higher quality earnings, we now expect EBITDA margin of 19.5% at the midpoint of guidance or 100 basis points of margin expansion over prior year.
It's another indication we're on track to achieve the 2025 value creation framework targets. Operating EPS is expected to be in the range of $2.80 to $3 per share, an increase of 9% versus the prior year at the midpoint, $0.10 higher than our original guidance, reflecting improved operating performance as well as the earnings from the acquisitions partially offset by the increased depreciation and amortization related to purchase accounting. We expect free cash flow to be in the range of $1.2 billion to $1.4 billion, an increase of $100 million at the midpoint from our previous guidance. That increase largely reflects higher earnings, coupled with an update to the 2023 capital spending forecast. And finally, related to capital allocation.
We remain committed to a balanced strategy, returning excess cash to shareholders while investing for growth. In the first quarter, we returned approximately $360 million to shareholders via dividends and share repurchases and we expect to complete a total of $500 million of share repurchases for the year. With that, let's go to Slide 11.
I want to provide some color on our outlook for the first half and full year. It's an important reference in light of the shifts in order patterns that we're seeing due largely to weather and reversions to more normalized conditions for supply chains. Specifically, our first half seed growth will be driven by continued pricing momentum and increased U.S. corn acres. However, seed volume growth in the U.S. is expected to be more than offset by the shortened safrinha season, supply constraints in Latin America, coupled with approximately $200 million headwind to volume related to our exit from Russia. For Crop Protection, first half volumes are expected to be down as growth from new products will be offset by more than $200 million of strategic product exits.
Additionally, we see customer buying behavior returning to historical patterns driven by improvement in supply chain reliability as well as higher interest rates, particularly in Latin America. In LatAm, we saw a significant growth in the first half of 2022, with more than 1/3 of Latin America's full year sales delivered in the period. In 2023, we expect the sales pattern to reflect more normalized timing, shifting more of the sales to the second half, so more like pre-2022 order pattern for the region. Here's a couple of other summary points.
As expected, cost inflation will be higher in the first half of the year due to the sell-through of higher crop protection inventory and the seasonal timing of higher seed input costs. We expect the rate of inflation to be high single digits for the first half of the year, moderating to low to mid-single digits in the second half.
Currency headwinds will be heavily weighted towards the first half of the year driven again by European currencies and the seasonal pattern of sales in EMEA. And consistent with our previous expectations, total company pricing is expected to be up mid-single digits for the year. The double-digit pricing gains reflected in the first quarter are expected to moderate as a portion of that pricing in the quarter was in response to currency headwinds in EMEA.
Operational efficiencies will drive improvement in SG&A. In fact, we expect that excluding the Biologicals acquisitions, SG&A will be effectively flat compared to prior year. And finally, approximately 80% of the full year EBITDA from Biologicals acquisitions will be delivered in the second half, reflecting Stoller's seasonal pattern. So in summary, we expect roughly 80% of our full year earnings to be in the first half of the year, which implies lower year-over-year growth in both revenue and EBITDA in the second quarter relative to the average that we're now forecasting for the first half of the year. And with that, let's go to Slide 12 and summarize the key takeaways.
The year is obviously off to a great start with first quarter growth led by EMEA in North America. The quarter's performance sets us up well for another year of delivering results. While we're confident that we're on track to deliver our full year guidance, we expect a greater percentage of revenue and earnings in the second half of the year compared to 2022, largely driven by supply chain improvement and normalization in customer buying behaviors.
We're raising our full year guidance, largely driven by the Biologicals acquisitions and operational performance. Importantly, we remain confident that we're on track to deliver on our 2025 financial targets. And with that, let me turn it over to Kim.
