Diversified chemicals manufacturer and Dow-30 component Du Pont (DD - Free Du Pont Stock Report) has reported its second-quarter earnings. Sales of $7.424 billion were up about 5% on a year-to-year basis. Volume increased in all reportable segments, though this was partly offset by a slight decline in local prices. Operating earnings advanced 11%, to $1.38 per share.
Several of the company's segments posted healthy growth in operating earnings for the June period. The Agriculture business benefited from greater insecticide and fungicide sales, along with higher soybean sales in North America. This was partly offset by reductions in local prices and greater product costs. Meanwhile, the Electronics & Communications business experienced higher demand in consumer electronics and semiconductor markets, along with stronger photovoltaic sales. Elsewhere, the Industrial Biosciences line gained from greater demand for biomaterials, bioactives, and CleanTech. This was partly offset by higher costs associated with growth investments.
Bottom-line gains were more muted elsewhere. At the Nutrition & Health business, higher demand in probiotics was partly offset by declines in systems and texturants and protein solutions. Volumes increased at the Performance Materials segment thanks to greater demand for polymers and high-performance parts. However, this was largely offset by greater raw materials costs and a planned turnaround. The Protection Solutions line benefited from improved demand for Tyvek protective material and Nomex thermal-resistant fiber, though operating earnings were constrained by lower prices and higher costs related to growth investments.
Looking forward, we expect results will remain solid across the board. The Industrial Biosciences and Electronics & Communications businesses should be important performance drivers. We have increased our estimates for full-year 2017, and now expect sales and share earnings of $26.5 billion and $4.05, respectively, for the company as a standalone business. That said, the merger of Du Pont and Dow Chemical appears set to close in August. The combination will create leading businesses in agriculture, specialty products, and materials science. These will then be separated into three independent, publicly-traded companies through tax-free spinoffs. This would likely occur 18 months after the closing of the transaction. The deal is expected to result in cost savings of about $3 billion.
About The Company: Du Pont is engaged in science and technology in a range of disciplines, including high performance materials, electronics, safety and security, and biotechnology. The company operates on a global scale, manufacturing a wide range of products for distribution and sale to many different markets, including automotive, construction, agricultural, medical, protective apparel, electronics and nutrition.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
