FMC downgraded to junk status by S&P amid patent cliff concerns

Investing.com -- S&P Global Ratings has downgraded FMC Corp. to ’BB+’ from investment grade, citing persistent weak credit metrics and increased uncertainty about the company’s future performance.

The rating agency assigned a negative outlook, reflecting the possibility of further downgrades in the coming quarters if credit metrics deteriorate beyond current expectations.

S&P lowered its 2026 EBITDA forecast for FMC to $850 million from $959 million, citing unexpected setbacks in cash flow during the third quarter of 2025 and heightened uncertainty about the company’s ability to grow earnings in a challenging operating environment.

A major concern is the expiration of FMC’s Rynaxypyr patent, which historically contributed 30%-40% of the company’s revenue in 2024. With core patents expiring across key markets by 2026, FMC faces significant exposure to generic competition, particularly in Asia and Latin America.

Despite implementing mitigation strategies such as securing long-term contracts and introducing new formulations, S&P believes a sizeable portion of revenue remains at risk. The rating agency expects FMC’s funds from operations (FFO) to total debt will be at the low end of 12%-20% at year-end 2025.

FMC has taken several measures to maintain its credit quality, including launching a cost-saving program, reducing its dividend by $250 million annually in the third quarter of 2025, and halting share repurchases until the fourth quarter of 2027.

S&P noted that despite current challenges, FMC continues to benefit from favorable long-term fundamentals, with no fundamental change in demand for the company’s products or its market position. The U.S. Department of Agriculture projects coarse grain production at 1,547 million metric tons, with global rice output exceeding 550 million metric tons in 2025.

The rating agency could lower its ratings further if operating performance weakens beyond expectations into 2026, or if patent expirations hinder earnings more than anticipated. Conversely, S&P could revise its outlook to stable if FMC experiences a larger-than-expected pickup in demand due to sustained improvement in the agriculture market.

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