President & Chief Executive Officer at FMC
Thank you, Zack and good morning, everyone. FMC delivered another quarter of strong growth in a dynamic global environment, while offsetting high input costs with our ability to price for the value we offer to growers.
Overall, first half performance was primarily driven by significant price increases and volume gains. This growth reflects robust market demand globally, despite cost inflation and FX headwinds. We continue to expect a strong second half of the year, driven again by price increases and volume growth in a supportive market environment.
Turning to Slide 3. Before we review details of our quarterly results and full year outlook, I'd like to offer a few comments on our recently completed acquisition of BioPhero, a Denmark-based insect control company that has pioneered a bioprocessing technology used to manufacture pheromone crop protection products. As you may know, pheromones are naturally produced by insects to trigger a social response in members of the same species. Pheromones are used in a variety of ways to protect crops by disrupting the insect mating process and hence significantly lowering subsequent generations of target insect larva which would otherwise damage crops.
There are several methods to manufacture pheromones but BioPhero's proprietary fermentation route is a game changer, enabling high volume production of pheromones at significantly lower costs than other production routes. The acquisition which closed on July 19, significantly expands our rapidly growing biologicals portfolio within FMC's plant health business. It provides a platform for large-scale production of pheromones and pheromone-based crop protection products which are expected to generate approximately $1 billion in revenue at above-average EBITDA margins by 2030. We have been expanding our plant health technology base and this acquisition is another great opportunity to continue bringing biological products to growers around the world.
Our Q2 results are detailed on slides 4, 5 and 6. Revenue was up 21% organically, EBITDA up 3% and EPS up 7%, driven by strong market demand for our innovative portfolio and an average price increase of 7%. Adjusted earnings were $1.93 per diluted share in the quarter, $0.08 above the midpoint of our guidance range. The year-over-year EPS increase was primarily driven by an increase in EBITDA and lower share count. GAAP results reflect the impact of our exit from Russia in April this year.
We had double-digit growth across several product categories, with insecticide showing the greatest increase at over 20% year-over-year. Our herbicide portfolio also had a strong quarter, with 15% growth led by North America and EMEA. Sales from products launched in the past five years grew more than 35% compared to the same period last year. And these products made up 10% of our total sales in the quarter.
The global plant health business grew 20% year-over-year, led by a 35% growth in our biologicals portfolio. The momentum of this business reflects our customers' demand for new sustainable solutions. We reported $1.45 billion in second quarter sales, led by price and volume growth in Latin America and North America.
In North America, sales increased 26% year-over-year. Demand for both herbicides and insecticides grew double digits. In Canada, high pest pressure supported the successful launch of Coragen MaX, an insecticide powered by Rynaxypyr, targeting a broad spectrum of pests such as grasshoppers in cereals and other crops. Diamides sales were impacted in California and Texas due to dry conditions but this was offset by growth in the Midwest in soy and corn.
In Latin America, sales increased 44% year-over-year, led by Brazil, Mexico and Argentina. Results were driven by the full range of our insecticide portfolio for soy, corn and cotton. Sales in EMEA grew 3% versus the prior year and we're up 15% organically. Aside from strong pricing, results were driven by increased demand for herbicides.
And finally, Asia was down 1% versus the second quarter last year and up 4% organically. Pricing gains were offset by FX headwinds. Demand for Cyazypyr grew in India for applications on fruits and vegetables. In Australia, Overwatch Herbicide continued to outperform competing products in cereals.
Overall, adjusted EBITDA was $360 million, an increase of 3% compared to the prior year period and $10 million above the midpoint of our guidance range. Volume gains and price increases more than offset cost inflation and FX headwinds. Average price increases of 7% contributed $84 million in the quarter.
As we expected, cost headwinds more than doubled from the first quarter as inflation continued to challenge our supply chains. FX was a $23 million headwind in the quarter, due to the weakening of European and Asian currencies against the U.S. dollar.
Before we review FMC's full year 2022 and second half earnings outlook, let me update you on our views regarding the overall market conditions. We now expect the global crop protection market will be up mid to high single digits on a U.S. dollar basis versus our earlier expectation of low to mid-single digit growth.
Latin America is now expected to be up double digits, primarily driven by pricing of non-selective herbicides. We still expect North America to be up mid-single digits, while Asia is now expected to grow low single digits. EMEA is still expected to be down low single digits, including the impact of FX. Excluding currency impact, EMEA is expected to grow low single digits. While commodity prices have come down somewhat from their highs earlier in the year, they remain elevated versus historical averages. This bodes well for the demand of our crop protection products through the end of this year and well into 2023.
Moving to Slide 7. We have seen pronounced shifts in demand and cost between individual quarters this year. Therefore, looking at the business in halves gives a better understanding of the underlying performance. For the first half, performance was very strong as a result of price increases and volume growth which contributed $178 million and $132 million to EBITDA, respectively. These drivers more than offset significant cost and FX headwinds of almost $250 million, resulting in 9% EBITDA growth over the prior year period.
In the context of our full year guidance, first half EBITDA growth represents more than three quarters of the increase required to achieve the midpoint of our full year guidance. When we consider the drivers for the second half of the year, price is again expected to contribute more to EBITDA than volume. Cost increases are expected to have the biggest impact in the third quarter, with continued but lower cost inflation forecast in the fourth quarter. There are two primary reasons for the expected cost increases. The first reason is the cost inflation related to sourcing from secondary and tertiary suppliers due to lack of availability from our preferred suppliers. The second reason is the lag of six months between procuring high cost material and its impact on our P&L, since FMC typically turns inventory twice a year.
Latin America and North America are our biggest drivers of revenue in the second half. And we have already captured roughly 70% of the orders needed in Brazil to deliver our second half guidance. For reference, this is normally around 50% at this time of the year. The increase in orders is due to the higher than average customer demand driven by favorable commodity prices. In the U.S., Q4 order discussions are taking place as we speak which is much earlier than in previous years, making us confident in our forecast. Overall, we expect the second half of the year to contribute 2% in EBITDA growth following a very strong second half of 2021.
Turning to Slide 8 and the review of FMC's full year 2022 earnings outlook. After a strong first half of the year, we are raising full year 2022 revenue to a range of $5.5 billion to $5.7 billion, representing an increase of 11% at the midpoint versus 2021. Sales growth will be driven by volume and price growth in all regions, partially offset by foreign currency impact in EMEA and Asia. We are narrowing the full year adjusted EBITDA range to 1.36 billion to 1.44 billion, representing a 6% year-over-year growth at the midpoint. The range for 2022 adjusted earnings per share is narrowed as well and is now expected to be in the $7.00 to $7.70 per diluted share, representing an increase of 6% year-over-year at the midpoint. Consistent with past practice, we do not factor in any benefit from potential future share repurchases in our EPS guidance.
Q3 and Q4 outlook is provided on Slide 9. Midpoint of our third quarter guidance implies year-over-year sales growth of 13%. Q3 EBITDA and EPS growth are expected to be limited by the highest cost increases of the year, despite the targeted mid to high single digit price increases. FX volatility in the absence of sales in Russia will also be headwinds to earnings in the quarter. Guidance for Q4 implies year-over-year sales growth of 2% at the midpoint compared to the exceptionally strong growth in the prior year period. Cost increases are forecasted to be lower in Q4 compared to Q3, while price increases are expected to continue. This is anticipated to result in an EBITDA growth of 17% at the midpoint with EPS up 13% at the midpoint year-over-year.
Moving now to the updated drivers of 2022 EBITDA outcomes on Slide 10. While the market growth assumptions have improved, costs remain elevated, though we are beginning to see the signs of cost inflation flattening. Price in the mid to high single digit and strong volume growth are expected to offset cost and FX headwinds keeping the midpoint of our guidance unchanged. While we expect the highest cost increases of the year in Q3, we do not expect material benefits from easing inflation to be realized until 2023.
With that, I'll now turn the call over to Andrew.