Diversified chemicals manufacturer and Dow-30 component Du Pont (DD - Free DuPont Stock Report) has announced fourth-quarter earnings. The company reported sales of $5.2 billion for the December period, a modest year-to-year decline. Operating earnings per share of $0.51 were well above the $0.27 a share generated in the prior-year period, and surpassed our estimate, as well. On a GAAP basis, earnings per share totaled $0.29. Free-cash flow improved $1.6 billion, thanks to greater earnings, a decline in capital expenditures, lower tax payments, and working capital improvements. Total sales fell slightly for full-year 2016, to $24.6 billion. But operating earnings per share of $3.35 were well ahead of the $2.77 figure generated in 2015. Measures to reduce costs have greatly benefited the bottom line here.
The majority of the company's business units reported bottom-line improvement during the fourth quarter, though top-line gains were harder to come by. The Electronics & Communications segment posted better performance, thanks to greater volumes of Solamet paste. The Nutrition & Health business benefited from growth in sweeteners and probiotics, though this was offset by declines in protein solutions. Operating earnings at the Performance Materials line advanced 17%, thanks to lower product costs and greater demand in global automotive markets. Meanwhile, the Agriculture arm benefited from foreign currency movements, but an unfavorable timing of seed deliveries constrained performance here. Elsewhere, the Industrial Biosciences segment posted lower operating earnings, due to declines in CleanTech.
Du Pont expects operating earnings per share will advance roughly 8% in the first quarter, on a year-to-year basis. We have reduced our top-line estimate slightly for full-year 2017, and now look for sales of $25.5 billion. But we have increased our share net call by a nickel, to $3.70. At this time it appears likely that the company's merger-of-equals with Dow Chemical (DOW) will close in the first half of the year. The deal had previously been expected to be completed by the end of the first quarter. The updated timetable appears to reflect regulatory scrutiny around the world, given the size of the two companies. Assuming completion, the new company is to be called DowDuPont. The combination would 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 probably occur 18 to 24 months following the closing of the merger.
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.
