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The chemical company was spun out of DowDuPont in 2019, and it is now one of the largest commercial producers of pesticides and seeds for the agricultural industry. With modest 2.7% sales growth in a tough year for the economy, Corteva delivered a 33% return to shareholders in 2020.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-234-Corteva

DowDuPont separated into three publicly traded companies in 2019: a materials science business called Dow; a specialty products business called DuPont; and an agricultural business called Corteva, which provides farmers with seed, crop protection, and digital solutions.

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43.CTW20.Corteva-Agriscience

The agricultural giant spun off from DowDuPont in 2019 works closely with development agency USAID in Africa and Asia. By improving yields and sustainability practices for small farmers there, including through its drought resistant and heat-tolerant seeds, Corteva has helped boost incomes and food security. Its latest goal: helping half a billion small farmers worldwide increase productivity by up to 300% by 2030.

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Corteva (also known as Corteva Agriscience) made its debut on the Fortune 500 list in 2020, one year after it was spun off from DowDuPont and became a public company. Soon after it began trading on the stock exchange, the then-largest U.S.-based manufacturer of the pesticide chlorpyrifos announced that it would cease chlorpyrifos production. Today, the leading agriculture company’s mission is to maximize productivity and profitability for farmers—that means developing and providing seed, crop protection, and digital solutions for them. As of 2025, the company operates across the United States, Canada, Latin America, the Asia Pacific, Europe, the Middle East, and Africa.

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Corteva (CTVA): Company Profile, Stock Price, News, Rankings

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Corteva

corteva

and welcome to Corteva Agriscience Second Quarter twenty twenty five Earnings Call. Please note that this call is being recorded. After the speakers' prepared remarks, there will be a question and answer session. Thank you. I'd now like to hand the call over to Kim Booth, Vice President, Investor Relations. You may now go ahead, please.

Good morning, and welcome to Corteva's second quarter and first half twenty twenty five earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Jud O'Connor, Executive Vice President, Seed Business Unit and Robert King, Executive Vice President, Crop Protection Business Unit will join the Q and A session. We have prepared presentation slides to supplement our remarks during this call, which are posted on the Investor Relations section of the Corteva website and through the link to our webcast. During this call, we will make forward looking statements, which are our expectations about the future.

These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the Risk Factors section of our reports filed with the SEC. We do not undertake any duty to update any forward looking statements. Please note in today's presentation, we'll be making references to certain non GAAP financial measures. Reconciliations of the non GAAP measures can be found in our earnings press release and related schedules along with our supplemental financial summary slide deck available on our Investor Relations website.

It's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us. We plan to update you today on our second quarter and first half performance, share our expectations for the second half of this year and provide some early thoughts on 2026. In the second quarter, Corteva delivered top and bottom line growth and more than 200 basis points of operating EBITDA margin expansion. For both the quarter and the half, we saw net improvement in price, volume and cost versus the same period last year.

This should tell you two things. First, there is strong demand for our proprietary technology as our growth platforms continue to deliver. And second, our operational excellence initiatives are creating value. In fact, we exceeded our 2025 net cost improvement target in the first half alone, allowing us to raise our full year target to $450,000,000 from $400,000,000 FEED continued its impressive performance in the first half of the year with two eighty basis points of operating EBITDA margin expansion and pricing gains in most regions. The volume improvement we delivered in North America made a significant contribution to Seed's first half results.

We also feel confident that we delivered healthy branded share gains in both corn and soybeans. This is a testament to the Pioneer business model and the strength of our product portfolio. Our outperformance in North America was also visible in our first half out licensing results, where we achieved a $70,000,000 benefit in net royalties versus prior year, exceeding our own expectations of a $65,000,000 net benefit for the full year. Turning to our Crop Protection business. As the results make clear, our technology remains critical to farmer productivity.

Our global operations are also becoming more efficient, which contributed to over three fifty basis points of operating EBITDA margin expansion for the half. Productivity and deflation benefits as well as volume gains drove the largest improvements in Crop Protection's solid first half performance. The volume improvement was most significant in Brazil, where we saw strong applications on additional planted area as well as expansion in our direct sales channel. Although the industry is expected to be about flattish overall for the year, our CP business continues to navigate a competitive market and we expect low to mid single digit pricing headwinds in the second half of the year. However, it's worth noting that this is now our fifth consecutive quarter of CP volume gains, with double digit volume growth in the second quarter.

So we are confident we have the right channel strategy and that pricing remains the key constraint to the industry getting back to its normal low single digit organic growth rate. For Corteva as a whole, we remain on track for double digit bottom line growth and meaningful margin improvement. In fact, as you saw from our announcement, as a result of our record first half performance and derisked expectations of modest growth in the second half, we are raising the midpoint of our full year operating EBITDA guidance to 3,800,000,000.0 a $100,000,000 improvement versus what we guided last quarter. We're also improving a favorable update on free cash flow expectations and forecasting a full year conversion rate of about 50%. David will go into more detail on all of this in a moment, including our latest views on tariffs and how these updates fall within our 2027 financial framework.

Turning now to the market outlook. Overall ag fundamentals remain mixed. Demand for grains and oilseeds continues to grow as farmers prioritize top tier seed and crop protection technologies to maximize their yields. However, overall crop prices and margins have moderated. The U.

S. Mix shift from soybeans to corn played out as expected and corn futures reflect the fact that crop condition ratings have been running above five year averages. Time will tell, but the market is certainly expecting a record harvest in The U. S. We all know that the technology keeps getting better and farmers know how to produce more every year.

But what is just as important is that global production continues to keep pace with record setting global consumption, so much so that stocks to use ratio for corn is expected to remain below historical averages, even considering this year's big crop. We're getting close to harvest here in North America and opening up global markets to allow for trade of these critically needed crops would help American farmers continue to feed the world. Regarding ag policy, we're seeing positive signals on the biofuels front. Corn ethanol in Brazil now accounts for 20% of the country's total ethanol production. And in The US, the EPA's twenty twenty six Renewable Fuel Standard proposal should spur additional demand for soybeans.

On gene editing, we remain optimistic that policy proposals in the EU for this critically important technology will pass by the end of the year. We're also encouraged by the fact that the new tax bill includes several changes that provide additional support for farmers in this very important industry. Finally, a few comments on 2026. It's still early and we need to see how the full year plays out, but we remain constructive on our views for growth next year and we are on a path that would keep us well within our 2027 framework, which was set last November. We feel good about what we can control, investing and executing on our growth platforms as well as delivering meaningful royalty productivity and cost benefits on a year over year basis.

We'll also provide more detail on our views of 2026 on our third quarter earnings call in November. In the meantime, we will continue to deliver top tier technology that gives farmers a competitive edge in achieving higher yields and greater sustainability in every acre they plant. With that, let me turn it over to David for more detailed insights into our financial results and outlook.

Thanks, Chuck, and welcome everyone to the call. Let's start on Slide six, which provides the financial results for the quarter and a half. Sales and operating EBITDA for both the quarter and a half were up versus prior year and better than our latest estimate, driven by a strong finish to North American season and continued execution on controlling the controls. Briefly touching on the quarter, organic sales were up 7% compared to prior year with gains in both seed and crop protection. Pricing for the quarter was up 1% with gains in seed partially offset by continued pressure in crop protection.

Second quarter volumes were up 6% with seed gains in nearly every region and double digit crop protection volume growth led by Latin America. Top line growth and meaningful cost improvement translated into operating EBITDA growth of 13% in the quarter and two fifteen basis points of margin expansion compared to prior year. Focusing on the half, organic sales were up 5% over last year, again with growth in both seed and crop protection. A continuation of the price for value strategy along with increased corn acres and market share gains in North America drove seed price and volume gains of 32% respectively. Crop protection price was down 2% in the half as expected driven by competitive market dynamics mostly in Brazil.

Crop protection volume was up eight percent but gains in nearly every region. Notably, new products and biologicals delivered double digit volume gains compared to prior year. Operating EBITDA was up 14% over prior year. Operating EBITDA margin of nearly 31% was up about 300 basis points driven by organic sales growth coupled with significant benefits from lower input costs and productivity. Moving on to slide seven for a summary of the first half operating EBITDA performance.

Operating EBITDA was up more than $400,000,000 to just over $3,350,000,000 Price and mix, volume gains and cost benefits more than offset currency headwinds. Seed continues to make progress on its path to royalty neutrality with about $70,000,000 in reduced net royalty expense. This improvement was driven by increased out licensing income in North American corn and lower royalty expense in soybeans. Seed and crop protection combined to deliver more than $400,000,000 in productivity and cost benefits, including lower seed commodity costs, raw material deflation and continued productivity action. In the first half, SG and A was up compared to prior year, driven by higher commissions, compensation expense and bad debt.

This increased investment in R and D aligns with our target and is on track to reach 8% of sales for the full year. As expected, currency was a roughly $150,000,000 headwind on EBITDA driven by the Turkish lira and Canadian dollar. Both Seeds and Crop Protection had an impressive first half performance and delivered double digit EBITDA growth and meaningful margin expansion over prior year. With that, let's go to slide eight and transition to the updated outlook for the year. Our updated 2025 guidance reflects the strength of our first half execution and continued confidence in delivering the second half.

We now expect operating EBITDA in the range of 3,750,000,000.00 to $3,850,000,000 representing 13% growth at the midpoint. This increase is driven by broad based organic sales momentum and incremental cost improvement benefits. While the majority of cost actions were realized in the first half, we anticipate continued gains in the back half. As a result, we now expect operating EBITDA margin expansion of approximately 150 basis points reaching the upper end of our prior range. We're also raising our operating EPS guidance to $3 to $3.2 per share, up 21% at the midpoint versus last year.

This reflects stronger EBITDA performance and lower than expected net interest expense. Finally, we are increasing our free cash flow guidance to approximately 1,900,000,000 with a cash conversion rate of about 50%. This improvement is primarily driven by earnings growth and lower cash taxes from recent legislation. We're keeping an eye on a few items as we head into the second half, specifically, firmer economics and liquidity as they influence the amount of prepaid deposits we received in the fourth quarter. Let's turn to Slide nine to walk through the key drivers of our first half performance and the setup for the second half of the year.

In the first half, we delivered strong execution across both seed and crop protection. North America seed performance was particularly strong, supported by increased corn acreage, market share gains and favorable weather. We saw low single digit price gains in seed, while crop protection pricing was down modestly, reflecting ongoing competitive dynamics. We captured meaningful benefits from controllable levers, namely productivity actions and raw material cost savings, which more than offset SG and A increases tied to commissions, compensation and bad debt. Currency remained a headwind, primarily driven by Turkish lira and Canadian dollar.

Looking ahead to the second half, our assumptions remain consistent with what we shared in May. We expect corn acreage to increase in both Brazil and Argentina supporting volume growth in both businesses. Volume growth in crop protection is expected to remain strong, particularly in new products and biologicals. On pricing, we anticipate low single digit gains in seed and low to mid single digit declines in crop protection. That said, the magnitude of cost and productivity benefits will moderate in the second half as we lap the deflationary impacts we saw in the 2024 for crop protection.

Finally, we expect a currency headwind from the Brazilian real due to hedge impacts. Our first half second half operating EBITDA split is expected to be aligned with our historical average. As a reminder, we anticipate a typical seasonal earnings pattern with a third quarter operating EBITDA loss at least as large as what we saw last year and all second half earnings delivered in the fourth quarter. This is after dialing in an expectation that Crop Protection second half EBITDA will be down high single digits due to an exceptionally strong second half in the prior year. Overall, we still remain on track for mid single digit growth in the second half.

With that, let's go to Slide 10 and summarize the key takeaways. First, while we still have half of the year left to go, we delivered a strong first half, ahead of expectations. Organic sales growth was driven by our leading North America corn portfolio and broad based volume growth for crop protection. We delivered over $400,000,000 in cost savings from lower seed and crop protection raw material costs along with productivity actions. The combination of organic sales growth in both business units, 70,000,000 in net royalty improvement and enhancements in our product mix contributed to about 300 basis point margin expansion over the prior year.

Given our strong first half performance and continued confidence in the second half, we've raised our full year 2025 outlook across all key financial metrics. And finally, we remain on track for $1,000,000,000 of share repurchases in 2025. We also announced a nearly 6% increase in the annual dividend, our fifth consecutive annual increase consistent with our dividend growth strategy. Combined, this translates to roughly $1,500,000,000 of cash returned to shareholders during 2025, a testimony to the strength of our balance sheet and cash flow outlook. With that, let me turn it back to Kim.

Thanks, David. Now let's move on to your questions. I would like to remind you that our cautions on forward looking statements and non GAAP measures apply to both our prepared remarks and the following Q and A. Operator, please provide the Q and A instructions.

Your first question comes from the line of Vincent Andrews of Morgan Stanley. Your line is now open.

Thank you and good morning everyone. Just sort of distilling the prepared comments down, it seems like there are four sort of items for the back half that really factoring into your forecast and that you have sort of a focal point on. One would just be the tough CP comp and the negative pricing in Brazil. And obviously, Brazil is a big part of the back half. It seems like and I'd like to hear more about the seed acreage expectations for the back half and how much you think they can be up year over year.

And then on a cash flow perspective the prepays and whether they come in and then obviously what happens with FX. So if you put all that together, is that sort of how you're thinking about the range of outcomes in the back half and whether you're at the low end or the high end and potentially above the high end?

Yes. Good morning, Vincent. This is David. Yeah. Pretty much, I think you summed it up pretty well.

I mean, when we look at the the year over year in the back half, and I'll just remind everyone, I know you know this, but our back half typically is only 12% or 13% of our entire EBITDA for the year. So this year, we have it kind of lined up very much in line with what we've done in prior years. When you look at the plus minus on crop protection, they did have a very strong second half last year. So we're lapping that. We're also lapping some of the cost deflation we already saw in the second half of last year.

And then we as you mentioned, the the price declines. And then we also have the FX impact, is a little bit two thirds of 70% allocated to CP just given their product flows. And then regarding acreage, I don't know, Jud, if you want to pick up the acreage receipt.

Yeah, Vincent. I think it's fair to say we're looking at mid single digit acreage increases for summer, which will start going into the ground here in October as well as we move into safrinha, which a big portion of those safrinha orders for that will go underground in 2026 will be realized here at the 2025 from a revenue recognition standpoint when growers take possession. We also see a little bit of a rebound mid single digits. We're confident about maybe a little more in Argentina coming off the down acres that we saw in 2024 and the 2025. So should be in a strong position acreage wise and planted area wise, I should say, hectare wise and planted area wise in Latin America.

Next question comes from the line of Joel Jackson of BMO. Your line is now open.

Hi, good morning. Thanks for the update. I want to talk about the free cash flow conversion or the free cash flow guidance. I mean, the 100,000,000 EBITDA raise, you're upping free cash flow by $300,000,000 the conversion is better. Talk about what's going on specifically there.

And then the second question is, you know, a $100,000,000, you know, EBITDA increase here, Chuck, you sort of alluded to a little bit '26. Some of that, can we assume you may have gotten in '20 in '26, a 100,000,000 boost here? Like, maybe just think about how you think about if you bore or not bore, but got a little early advance on some earnings in '26.

Okay. So Yeah. So we'll we'll have David talk about I'll do the cash flow. And I can come back and give you perspectives on '26.

So, you know, if we look at where we are right now with cash generation through the first half, we are $900,000,000 ahead of last year. And we expect, as you mentioned, the free cash flow somewhere around the 1,900,000,000.0. So the adjustment to the overall guide is really twofold. One is our earnings increase that we increased the midpoint of our guide. But also with the new tax legislation, we are expecting less cash taxes in 02/2025, and that represents about a 4% uplift in our overall conversion rate.

So when you end up adding those two factors together, we're now, expecting about a 50% conversion rate for the year, 1,900,000,000.0. I will remind everyone that and the way that looks on our balance sheet is not that we're accumulating cash on the balance sheet. It really represents itself in our lowering our needs for borrowing more CP. And so in the first half, you'll see that we borrowed a lot less commercial paper resulting in lower interest expense. And that's one of the major drivers of our overall first half EPS increase.

Also reminded everyone that our $1,900,000,000 is very much dependent on our cash credit mix at the end of the year. We have dialed in a number that it's very similar to past years. So as you know, we'll keep an eye on that as we progress through the fourth quarter. Yeah.

And then Joel, it's Chuck. So look, talking about 2026, it's a little early. I would say right to your question though, there's been no pull forward from '26 and the '25. I'll just take everybody back to the financial framework we set last November on an EBITDA basis. We're trying to deliver a $1,000,000,000 increase over three years.

This guide range now at when we moved it from 03/07 to 03/08 from a midpoint perspective, we're we're right within that framework. And if you look at the levers that we're pulling to create that billion dollars, they're the same things we've always talked about. They're the the three, primary growth platforms. So you're seeing really good growth in seed out licensing, our biologicals business, and our our CP new products. They're delivering.

They delivered a little bit more across the board in the first half. We feel good about the next two to three years. And then cost and productivity, which is really, I think, one of the main headlines for this first half, Both the CP business and the seed business almost equally are pulling every productivity lever they can. We've got a multiyear program. As you know, we're looking at kind of restructuring assets in CP, and we're really looking at the production and automation of our seed production.

And you can see for the first half, 400,000,000. We've raised that now to $4.50 for the full year. And if if you look at what we need to deliver through the 2027, it's about $700,000,000 of the $1,000,000,000 is going to come out of this bucket. And if we're at $450,000,000 we're feeling very, very good about that. So you put it all together, and I'd say I'm pretty happy with the first half performance.

I think when you think about the second half, it's less relevant for us, but we need to get through LatAm, specifically Brazil. The order books are looking very, very good. I think our cost set up in feed particularly is great for second half LatAm, and it's going to come down to CP pricing. But we're well within the framework for the next two years.

And the next question comes from the line of Chris Parkinson of Wolfe Research. Your line is now open.

Thank you so much for taking my question. It seems The U. S. Seed price cards are already tricking out from you in certain cases and some of your competitors and it seems like it's indicating low single digits for both corn and soy maybe a little bit healthier on the corn side. Could you just discuss kind of the pricing strategy into the end of the season and also how those embed and how your expectations on a preliminary basis would embed the ramps of both VorSeed and PowerCore just given your confidence in those launches as well? Thank you.

Okay. Chris. This is Jud. And just as we are launching price cards, you've probably seen some of it.

Some of our brands are in the market. We certainly see some competitors in the market as well. A couple of things from a North America perspective. One, mix improvement with VorSeed and PowerCore. Number two, germplasm performance and the fact that we've continued to bring genetic gain and new hybrids into the lineup that allows us to leverage more price and farmers are more than willing to share in that as we bring higher levels of productivity.

And then there's a little bit of organic price lift in there as well. So the combination of those will get us to low single digits, maybe about where we were in 2025, maybe a little more dependent on how the year plays out. But we feel very good about what 2026 looks like from pricing opportunity and our mix.

Yes. And maybe Chris just a couple of other comments. So if you look at the first half for Seed, EBITDA is up $250,000,000 or 11% with two eighty basis points of margin enhancement. And we're seeing market share gains in corn and soybean, which we're already number one in both of those technologies. So you start thinking about just this business is firing on all cylinders.

When you add to the mix, gets us most exciting is the growth of the out licensing and the actual the potential for that. Right? So we've already sized that in corn and soybeans around the world, primarily in North America, Latin America. It's a $4,000,000,000 opportunity. We're a relatively small player.

We've said we would be royalty neutral by 2028. And then really exciting things happen post 2028 as we get more licensing income because we have more freedom to operate for our technology. So I think we're on this really interesting strategic pivot when it comes to see where we're not in licensing technology as much as we're out licensing technology. And that's sort of the long term goal for this business.

Your next question comes from the line of Kevin McCarthy of Vertical Research Partners. Your line is now open.

Yes. Thank you and good morning. I wanted to unpack the crop protection volume a little bit. Appreciate the details that you provide on Slide 17. And in particular, I want to dive into fungicides, which was up 40%.

Can you help us understand how much of that was market related versus your ramp of Picolimide products? I think you're still ramping on Initrek to some degree and more recent launch of Atavelle would be the first part of the question. And then looking ahead to next year, you entered into a partnership recently with FMC for Fluendipere. So maybe talk about what that might mean for Corteva and fungicides next year.

Kevin, this is Robert. Thank you. When you look at fungicides for the first half, yeah, we had a good half. I'll take you back to 2023 where prices really started falling. We decided not to participate in some of the business there due to really low margins.

And our strategy has been to take out cost and to begin to change our overall footprint and network. And that's working for us. And this is a good example of that where we now went back into the market and at acceptable returns with our Onmyra brand. And we've been able to get back in the market there in Brazil. And that's been the big uptick of fungicides for us in the first half here is our strategy is playing out and we're in the market with good volume there.

Looking now to back half of the year and into the future, we did do a deal with our partner FMC, our competitor FMC for a brand for SIVO. It is going to be a new three way fungicide that we've not participated in this market before in North America corn. It gives us a premium product to be able to position with our overall portfolio if we have a very good two way approach prima. But this now gives us a top tier as well. And this is exciting for us in the fact that we think we can scale this and we'll be able to get on a lot more acres to give our farmers more choices as we look forward in our overall portfolio there with fungicides. So it's exciting times as we begin to bring some of these new products to market for crop protection. Thank you.

Next question comes from the line of Frank Mitsch of Fermium Research. Your line is now open.

Good morning and congratulations on a very strong quarter driven partly by share gains. I was wondering if you could opine on what your expectations were for share gains in both corn and soy. I wondered to what extent given the fact that we are looking at a potential record harvest in corn, obviously that's driving the price of the commodity lower. Chuck, how do you feel about what impact that may have on twenty twenty six corn acres?

Yes. So why don't we have Judd talk about performance and the share gains and then I'll come back and talk about the market.

Very good. Thanks for the question Frank. And from a share gain perspective, right, we still have to get to the final numbers in terms of where we landed with acres. It does feel like the number we have out there with USDA at 95 makes sense. If you look at what our volume is versus where we believe acres are planted, we've picked up share in both corn and soy.

Very, very strong performance on the soy side with not only our Z Series beans and our Pioneer brand, but our regional anchor brands performing very, very high. And we are providing our licensees with some of the very best germplasm and product performance in the industry on soy. When you think about Power Corn vore seed performance again has allowed us to continue to pick up share. And we've clearly taken a leadership position in the above and below ground protected market. And our doubles or above ground performance has been exceptional.

So we're excited. Maybe one other piece, our retail partners with Brevant and the initiative and strategic play that we had in terms of entering that retail space with a premium brand has had tremendous success as well and they picked up some share here in 2025. So feel good about where we're at. Chuck?

Yes. And then Frank on the fundamentals. So look, you you think about what's happening, right, it's another year of record demand in terms of consumption for grains and oilseeds, and we've had very good, production. So production is keeping up with with demand, which is good. But stocks to use around the world, especially if you look at corn, it's tight even though the market is expecting, you know, a big crop from The US and a big crop from LatAm.

So it's it's pretty interesting because you've got relatively low crop pricing today, but the stocks to use are not going up. So any wobble here when it comes to either total production or even China buying behavior, because right now, they're not really buying a lot of product yet, This this could actually go the other way, and and you could see even further strength in the ag fundamentals. And and so we're watching it very carefully. So it it's a little early to call twenty twenty six. But if you look at the futures price today, it would be a flip of a coin.

Right? Now what what the prevailing thinking is, and we would agree with this, is that you're probably gonna see slightly less, corn area, and probably slightly more soybean area. But The US is gonna plan a 100,000,000 a 180,000,000 acres of both. So and I think what what the determining factor will be, of course, will be economics at the time. But we also have to watch the trade discussions that are happening right now, and geopolitics will play into this because we do need some trade routes to open up, particularly for soybeans.

And that will weigh on farmers planting decisions as we get through harvest and into next year. So time will tell, but that's our current thinking today, Frank.

Next question comes from the line of David Begleiter of Deutsche Bank. Line is now open.

Thank you. Good morning. Chuck, just on CP pricing, can you talk to what you're seeing in terms of the price of Chinese and Indian generics? And overall, are you seeing CP pricing in the back half get any worse or just more stabilized here? Thank you.

Yes. So why don't I have Robert talk a little bit about what he's seeing in the markets and then I'll come back with a few high level comments on the CP market generally. Go ahead, Robert.

Sure, David. CP pricing, you've seen, we think we'll finish the full year at low single digits. Second half, we're really focusing a lot on Brazil. I'll take you to before we get to that, just the first half, pricing in all regions was relatively flat with the exception of Brazil. And, so second half of our business is primarily Latin America.

Brazil is a big piece, so we're watching this. And imports are up a little bit in Brazil, but we're seasonally high headed into the into the season. The channel is full as expected. Ample supply. With economics in area, we're continuing to have pricing pressures with competition as well.

So it's an area that we're watching. And but yet, as you look at the year over year as we approach 2026, quarter to quarter or quarter over quarter, the pricing improves. It is not as much of a decrease as it has been in the past, and we think it continues to get better as we move forward. So I'm still bullish on it a little bit, because I do think that pricing does continue to get better as supply tightens up and as exports out of China continue to be stable from a pricing standpoint. They are low, but they're stable. And so those are signs of movement in the right direction. Chuck, something to add?

Yeah. So look, David, if you think about the CP market fundamentals overall, we all know it's a well supplied market. But it is improving.

The overall market, at least the way we're looking at it, is slowly improving. And most of the major markets so the destocking is well behind us. We said that last quarter, I think, and we're seeing the channels all channels be very healthy. And then pricing. So we're watching pricing very, very carefully.

In most major markets, it has stabilized. And in some markets, pricing is starting to go up after several years of declines. Robert called out Brazil is probably the area where we have the most concern. It's probably the most competitive market in the world right now when it comes to CP. And we are obviously when we dialed our thinking into our guide, we said that the second half pricing will probably be down low to mid single digits in Brazil.

But the early signs, so if you look at sort of the leading indicators, China generic pricing for four quarters now in a row, the pricing is stable. So it's no longer going down for almost a year, which I think is great. And then production in China, so the inventory in China is actually improving as well. So there's less product that being exported. So all of that leads me to believe that 2026 should be better than 2025, but we don't have a great insight until we get through the first or the second half in LatAm.

And we'll update the market as we learn more. But that's our thinking right now with the CPAG fundamentals.

Our next question comes from the line of Jeffrey Lykauskas of JPMorgan. Your line is now open.

Thanks very much. Two part question. Can you talk about how tariffs have affected your supply chain? That is with different tariff issues arising. What are you doing different in terms of sourcing and in terms of shipping?

And for David, inventories really look like they're in pretty good shape, where year over year they're down $600,000,000 and they were down sharply in the first quarter. By the end of the year, do you think your inventories will be much lower than they were last year?

Jeff, I'll take the first part of that one, talk a little bit about what we're doing from a supply network, to to work through these these challenges. I think as you as you look at the overall supply chain for Corteva, recall that we've started in on this strategy a few years ago to improve our resiliency. And in doing that, we've been working on increasing our multisourcing. And as you know, this is not a fast process with regulatory requirements. As as you move a a source, you have to get it registered, and it does take some time.

But we're making great progress there. And so from a tariff standpoint, we've been able to navigate in the water so far. And, you know, the the impact is is, I'm gonna call it, minimal, from a overall standpoint. And that's really because our our supply chain teams have been hard at work well in advance of this. I'd like to say we're that smart, but, we, were ahead of this before it ever started.

And we're in a pretty good position from a multisourcing standpoint. So we don't see a big issue right now as it stands, from what we know today, and I think we're in a pretty good position to manage these things as we move forward.

And Jeff, regarding inventory, yes, thanks for pointing out the fact that we are in a very good trajectory so far in this year. We do expect the back half of the year to add some working capital, and we've had a really good run so far in the first half of this year. But by the second half, we expect inventories to be around flat to prior year, maybe down slightly from where we were in 2024.

Question comes from the line of Richard Gurchettoneira of Wells Fargo. Your line is now open.

Great. Thanks for taking my question. Chuck, given the strong first half of the year and the race as fully your guide, I was curious your thoughts in terms of where do you think the market has really surprised you since the Investor Day and since you set the targets for this year? And then, you know, you talked about the, progressing ahead of schedule on the net royalties as well as on the cost side. Any chance you can see a pull forward in terms of those targets?

You mentioned 700,000,000, in costs. Can we get there sooner than originally thought? And same question in terms of the net royalty neutrality, target of 2028. Can we get there ahead of them sometimes? Thanks.

Yeah. Good questions, Richard. So look, on the net royalty, we've already pulled it forward. Right? So it was 2030.

Now it's 2028. We're feeling very confident around that timeline, and I think that the first half performance would be reflective of that timeline. From an overall market and what has surprised us, look, I think we've all kind of been focused on the growth platforms the way we've outlined them. And and really, if you've heard me talk before, I'm a big believer in controlling our controllables, and the growth platforms are what we can control. So the new products, I think, are performing well in CP.

The outlicensing, there just seems to be a lot of interest the major markets to have another set of technology in out in licensers' hands. So I think that that's really good, and we're gonna go as fast as we possibly can. And and we've already pulled some of that, I think, forward a little bit. When you start thinking about the other surprising area, though, it it is CP. When I look at at this year's market being flat, our our business is gonna be gonna be up.

And I think that is some of the hard work that Robert just described, which is on on the cost and productivity front. So where where I think we we've probably seen the market in CPB at at the low end for a little longer than we all expected, even though I just said it is getting better and we believe it is getting better, I think we've been able to find ways to offset that with the levers we can pull, namely on cost and productivity, and then leaning into the strengths of our technology. And so the the formula is pretty boring, but it's one that has worked for us and will continue. When I look at the the targets, all I'll say is that there's a wide range there, and we feel comfortable that we're well within that range today. And we'll continue to update you as we learn more through the business operations.

Your next question comes from the line of Kristen Owen of Oppenheimer. Your line is now open.

Hi, good morning. Thank you for taking the question. I wanted to ask a little bit about your second half feed assumptions. Just as we're shifting to Brazil in this half, you mentioned order books are looking healthy. Can you maybe articulate a little bit more on some of the velocity of those order books?

Corteva (CTVA) Q2 2025 Earnings Call Transcript

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