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spun off the machinery business in 2001. Now, Brondeau wants FMC to become a global brand and increase its presence in China, where it now gets 16% of its sales. Being more successful in Asia and other emerging markets, he says, will require a tweak to the corporate culture. “FMC is a company completely centered around the businesses; that’s the DNA of this company.” Each business is strong because it has a sense of ownership, closeness to customers, and deep market knowledge, he observes. But “the downside is sometimes you don’t leverage your size across the company,” he says. Brondeau says his electronic chemicals experience at Rohm and Haas showed him how to create new businesses. But just as important, “we really developed strategies to grow in Asia faster than most companies,” he says. He believes Rohm and Haas’s more centralized structure brought it a stature that smoothed entry into new markets. PEPPER POWER
An FMC agricultural scientist (right) consults with a vegetable farmer in Mexico.
FMC LOOKS ABROAD NEW CEO turns attention to emerging economies for firm’s specialties businesses MELODY VOITH, C&EN WASHINGTON
PIERRE BRONDEAU can get so excited
while discussing the prospects for FMC Corp. that he momentarily lapses into his native French. As the specialty chemical firm’s new chief executive officer, he is counting on his international flair to help raise FMC’s profile in emerging markets. Brondeau took the reins of FMC from William G. Walter on Jan. 1. Unlike his predecessor, who had a policy of not speaking to the press, Brondeau seems to welcome the opportunity to talk about his goals for FMC and the leadership attributes he brings to the job. In explaining his global plans, Brondeau points to his 20 years at Rohm and Haas, where he rose to become president and chief operating officer. He joined the company’s plastics additives business in 1989 and moved into electronic chemicals in 1993, later leading the business as it grew in Asia. When Dow Chemical acquired Rohm and Haas last year, Brondeau was named CEO of Dow Advanced Materials. He stayed for the integration period, and then looked for something new. The opportunity to become CEO of a publicly traded specialty chemical maker was too good to turn down, Brondeau says. “FMC is a company Rohm and Haas people know well. It’s a company I’d admired for a long time,” he reflects. Both firms have their
roots in Philadelphia, and Brondeau’s new office is only 10 blocks from his old one. The first admirable trait Brondeau lists is FMC’s financial strength. In 2009, the company had more than $2.8 billion in sales and net earnings of $229 million. “It’s in great shape. FMC is profitable, has good cash flow, and a healthy balance sheet,” he points out. But what makes FMC interesting, Brondeau tells C&EN, is its product portfolio. “Any company in the world of specialty chemicals that has products in lithium, food, pharmaceuticals, and agriculture— you have to like it. You know there will be growth opportunities including expanding into rapidly moving economies like China, India, and Central and Eastern Europe,” he asserts. “You can really create a company which can go beyond where it is today.” Compared with where it started, FMC has already traveled a great distance. The company went public in 1928 as a manufacturer of food and agricultural equipment, calling itself Food Machinery Corp. It began acquiring chemical companies in the 1940s and
CURRENTLY, FMC is organized into three
segments: agricultural products, specialty chemicals, and industrial chemicals. The agricultural segment sells niche products that kill unwanted weeds, insects, and fungi. Within specialty chemicals are FMC Lithium and the fast-growing biopolymers business. The company’s industrial chemicals segment includes soda ash, peroxygens, phosphates, and sulfates. Brondeau says he is satisfied with the portfolio he inherited from his predecessor, although he acknowledges that many observers consider the diverse collection a bit strange. He has labeled the largest businesses—soda ash, biopolymers, lithium, and agricultural chemicals—as keepers. And he says the peroxygens business is well positioned. That leaves businesses with combined sales of about $300 million per year, including phosphates and sulfates, that could be sold or built upon. Dmitry Silversteyn, a chemical stock analyst at Longbow Research, is not surprised that Brondeau is not eager to make major
“FMC is a company completely centered around the businesses; that’s the DNA of this company.” WWW.CEN-ONLINE.ORG
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provide structure, texture, and stability— point for lithium will not arrive for at least for example, in the creamy filling of a shelffive years. “When it takes off, we need to stable pastry. be in the right place. We are mining today FMC’s corner of the food ingredients in Argentina, but do we expand? Should we market is growing quickly, powered by inthink about Bolivia or China? We need to creasing global demand for be making the right moves now in capital convenience food. New foods expenditures and product development.” with healthier profiles use hydrocolloids to replace fat and THE THIRD SLICE of FMC’s portfolio is to disperse vitamins, minerinorganic chemicals. For its soda ash busials, herbal extracts, and the ness, 2009 was a tough year. Low demand like. The Freedonia Group, a for auto and construction glass, the chief market research firm, reports end markets for soda ash, hurt sales. Meanthat demand for texturizers while, Chinese producers, which syntheand fat replacers grew at an size soda ash rather than mine trona deposannual rate of 5.4% from 2004 its as FMC does, cut their prices (C&EN, to 2009 and that they are now Sept. 7, 2009, page 36). But demand and an $885 million market. price are projected to rise in 2010, and the Brondeau sees the fracbusiness’s cash flow will likely be strong tured food ingredients sector through 2011, Brondeau says. as a big target for growth, orSoda ash’s volatility provides the swing ganically and through acquisifactor in FMC’s quarterly earnings, giving tion. “With the attractive profits and growit a “disproportionate” amount of airtime ing market, we’d like to apply our knowledge among stock analysts, Brondeau complains. to a broader product line.” He has observed Analyst Silversteyn agrees. “As a long-term FMC’s scientists working closely with food fan of this stock, I try to concentrate on the makers in the lab and says they can develop crop protection business much more than great new products together. soda ash. If the management plays up that Microcrystalline business, it will go a cellulose, developed long way to improve VIVE LA DIFFÉRENCE by FMC from wood their stock price and Agricultural chemicals pulp, is used primarhelp achieve Pierre’s have an outsized contribution ily in pharmaceutical goal of growing into to FMC’s earnings excipients and coatnew markets.” But soda ings. The company ash is important, SilSpecialty estimates that one out versteyn says, because chemicals Agricultural of every two tablets it generates cash that 27% products in the world contains FMC will need to ex37% FMC ingredients. The pand into higher margin growth opportunities specialties businesses. here include more soThat kind of expanphisticated controlledsion is presumably Industrial release drug delivery. why Brondeau was chemicals FMC’s other growthtapped to run the 36% oriented specialty company and boost its 2009 sales = $2.8 billion chemical business is its presence outside of lithium operation. The North America. company is one of only “What I bring to Specialty chemicals three firms, including FMC is what is reAgricultural 30% products SQM and Chemetall quired to grow busi53% Foote, with a full lithium nesses with a blend supply chain at purity of organic growth, levels that can supply technology marketing, the future electric-car and mergers and acquiIndustrial chemicals battery market. sition,” Brondeau says. 17% Although the growth “I know how to use the prospects for biopolyadvantage of rapidly 2009 operating earnings = $538 million mers and agriculture developing economies are immediate, Bronto grow in the area of SOURCE: FMC deau says the inflection specialty chemicals.” ■ FMC
changes to the lineup. “It’s too soon for him to have a vision of his own,” Silversteyn points out. But Brondeau’s success in quickly building businesses at Rohm and Haas means “when he finally gets comfortable with the opportunities and growth strategies, we might see a faster pace of deals.” It’s the possibilities in agriculture and biopolymers that put the sparkle in Brondeau’s eye. While the recession knocked the wind out of commodity chemicals, it turned the spotlight to noncyclical businesses that are resilient to downturns. In the first quarter of 2009, when the chemical Brondeau industry was in the depth of the downturn, FMC saw its earnings drop only 2.1% compared with the year-before quarter, while the 23 firms tracked by C&EN saw earnings plunge 68.1% on average (C&EN, May 18, 2009, page 21). More recently, in the fourth quarter of 2009, earnings from FMC’s agriculture products increased 39%, while earnings in industrial chemicals shrank by 39%. “The strong performance of our agricultural business is the result of a well-thoughtout strategy that began in the mid-2000s,” Brondeau explains. He says FMC wisely decided not to compete with tier-one players such as Bayer, BASF, Dow, DuPont, and Syngenta, which all moved into biotech. “That’s not what we do,” he says. Instead, FMC’s strengths are niche applications—against tough pests such as the velvetleaf weed and the Colorado potato beetle. It spends the greatest portion of its company-wide R&D budget on its agriculture products. Here, too, Brondeau says, “I have significant plans to grow in Asia.” The competitive landscape is different for biopolymers, where FMC stresses that it is the number one manufacturer in its three product categories. The company began acquiring businesses in the 1960s and now makes alginates, carrageenan, and microcrystalline cellulose for the food, pharmaceutical, and personal care industries. The most recent addition to the family was ISP’s alginates business, bought in 2008. Alginates and carrageenan are derived from seaweed. FMC controls the supply chain starting with seaweed harvesting in faraway places such as Iceland and Tasmania. As food ingredients, the products
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