Mark A. Douglas
President, CEO & Director at FMC
Thank you, Zack, and good morning, everyone. Our second quarter results are detailed on slides three, four and five. Sales in the quarter were significantly impacted by a substantial decline in volumes across all four regions. During our first quarter earnings call, we already had reduced our outlook for the crop protection market and thought that it would decline by low single digits this year. We now believe this is no longer a valid assumption. Considering the abrupt and intense destocking by growers and the distribution channel in the second quarter, we now expect the global crop protection market to contract by high single digits to low double digits, even as on-the-ground consumption by growers remains at levels similar to last year and planted acres continue to grow in key geographies. Channel feedback indicates the destocking actions are a result of three factors: first, higher interest rates have increased the carrying cost of inventory; second, there is increased confidence in product availability as the supply chain disruptions of the past few years have eased; and third, price reductions in fertilizers and nonselective herbicides have led to a wait-and-see approach to ordering. As a result, growers and the distribution channel are placing orders as close to application as possible.
For FMC, the reduced volume led to second quarter revenue that was 30% lower than the prior year and 28% lower, excluding FX. Despite the challenging market conditions, sales of new products introduced in the last five years remained resilient and were at levels similar to last year, which aided product mix and illustrates the value of our innovative portfolio. Branded diamides also outperformed the rest of the portfolio. Price increases were broadly implemented in the quarter with an average gain of 3%. While our newer products generally perform better on a relative basis, nearly every country reported lower volume compared to the prior year period which illustrates the widespread nature of current channel dynamics. Turning to the regions. North American sales declined 25%, 24%, excluding FX, versus the second quarter prior year. Overall, volumes were down. However, new products introduced in the last five years grew 43% and comprised 28% of total revenue, a record for the region. Branded diamides, including Coragen MaX, also showed strong growth, primarily due to elevated insect pressure in Canada. Sales in EMEA declined 26% year-over-year and were down 24%, excluding FX. Stronger pricing in the quarter was more than offset by lower volume as destocking was compounded by adverse weather across Europe.
Shifting to Latin America. Revenue declined 38% versus the prior year period as the region faced additional headwinds to volume from a historic drought in Southern Brazil and Argentina. In Asia, sales declined 29% and were down 23% organically. In India, excess rain in the North and delayed monsoon season in the South added to volume challenges from continued high channel inventory. Australia and parts of ASEAN were also impacted by adverse weather. Overall, EBITDA was $188 million in the quarter, down 48% compared to the prior year period, primarily due to the volume decline. Pricing momentum continued in the quarter. Costs became a year-over-year tailwind for the first time since 2020 as input costs continue to decline and we closely manage spending. FX was a headwind to EBITDA in the quarter. Moving to the outlook for the rest of the year. slide six shows our expectations for the second half. Overall, our second half EBITDA guidance is in line with the guidance provided during our first quarter earnings call as we expect the negative impacts from lower volumes to be modestly offset by lower costs. We expect second half revenue to be slightly below the prior year period at the midpoint and are assuming that the channel's active inventory management will continue, especially in Q3.
However, we expect destocking headwinds to be partially offset by new product launches and higher volume in Latin America in the fourth quarter. We are assuming growers will continue to order products closer to the planting season. Business fundamentals remain solid as grower consumption and product applications are expected to remain steady and planted acreage is projected to increase. We are expecting a low single-digit pricing benefit in the second half with the majority of pricing actions already in place. FX impact is forecasted to be minimal. We are guiding EBITDA for the second half of the year to be $801 million in the midpoint, which is a 16% higher than the prior year results. The main drivers are expected tailwinds from lower input costs, improved mix from new products and a modest pricing tailwind, partially offset by volume headwinds. This is expected to result in EBITDA growth and healthy margin expansion. Slide seven provides the quarterly guidance for the second half of the year.
Volumes are forecasted to more heavily weighted toward the fourth quarter as the recent hand-to-mouth inventory management is expected to result in growers and the distribution channel making purchases closer to the timing of applications, especially during the start of the planting season in South America. Our third quarter revenue guidance at the midpoint is 11% lower than the prior year as destocking is expected to continue, resulting in a volume decline in the low teens percentage. However, we are still projecting slight EBITDA growth at the midpoint as favorable input costs are anticipated to offset the revenue headwind from the volume decline.
Fourth quarter revenue is expected to be 6% higher at the midpoint versus the prior year driven by the timing of orders shifting from the third quarter, product launches and additional acreage in Latin America. EBITDA and earnings per share are both expected to be 24% higher than the prior year at the midpoints, primarily from higher volumes and the positive mix impact from new products. Slide eight provides the second half assumptions for the outcomes at each end of our guidance range. The largest variable in the range is volume, which is closely tied to the duration of channel destocking. We are assuming a high single-digit volume decline and a low single-digit price benefit. Across the guidance range, we are confident in our cost discipline, and we still expect input cost tailwinds. However, we are aggressively managing our working capital in response to the current trend of order patterns, including adjusting production levels across our manufacturing lines. Many of our lines are currently not operating, which will result in some unabsorbed fixed costs.
I will now turn it over to Andrew to cover cash flow under the financial items.