FMC's 2025 Collapse: Earnings Misses and Dividend Cut Expose Deep Balance-Sheet Strains

What happened

FMC Corporation's stock plunged 72% in 2025 after missing revenue expectations in both February and October earnings reports, culminating in an 86% dividend cut that shattered investor confidence. SEC filings reveal this decline was not just cyclical but stemmed from structural issues: net debt/EBITDA near 4.9x, leverage brushing against a 5.25x covenant cap, and guided free cash flow of negative $200M to zero for 2025. Despite cost-saving efforts like Project Focus, mid-single-digit price declines across key regions and weak volumes in Brazil and North America eroded EBITDA, with a 33% negative price impact over nine months. Management's pivot to balance-sheet repair—via the India divestiture and dividend reduction—acknowledges creditor pressure but faces high execution risk amid generic competition and customer credit constraints. Market narrative has shifted from a hopeful recovery story to a focus on liquidity survival, with repeated guidance cuts underscoring unreliable forecasting.

Implication

The dividend cut and earnings misses confirm FMC's distressed state, meaning equity is subordinate to debt repayment, with any upside contingent on flawless execution of restructuring and pricing defense. Key near-term risks include leverage breaching covenants, which could force dilutive equity issuance or asset sales at fire-sale prices, potentially wiping out shareholder value. Monitoring should focus on Q4 2025 free cash flow versus guidance, progress on the India sale, and EBITDA stability despite ongoing price erosion. Without visible deleveraging toward sub-4x net debt/EBITDA and sustainable positive cash flow, the stock's low multiples (EV/EBITDA 3.6x, P/B 0.5x) represent a value trap where creditors capture most franchise upside. Therefore, investors must prioritize capital preservation, only considering entry if FMC meets its 2025 targets and shows clear momentum in reducing net debt by over $200M within the next six months.

Thesis delta

The recent events validate the DeepValue report's bearish thesis, emphasizing that balance-sheet stress, not just cyclical headwinds, drives FMC's downturn. No material improvement has occurred; the investment case still hinges on successful execution of Project Focus and deleveraging, with increased urgency due to the dividend cut eroding income appeal. Consequently, the WAIT rating and need for proof of free cash flow inflection remain unchanged, but the timeline for re-assessment may shorten if further guidance misses occur.