DuPont profit beats on strong seed demand

Date:04-26-2017


Chemicals and seeds producer DuPont (DD.N), which is merging with Dow Chemical Co (DOW.N), reported a better-than-expected profit for the seventh straight quarter, helped by a rise in seed sales, sending its share up 3.5 percent.

DuPont, which is merging with Dow Chemical Co (DOW.N), continues to expect to close its merger in August, Chief Executive Ed Breen said in a statement. Regulatory hurdles have repeatedly delayed closing of the merger, which was announced in December 2015. Any further asset sales required to win regulatory clearance would be "small, nothing of significance", Breen told Reuters. DuPont said last month it would swap assets with FMC Corp (FMC.N), acquiring nearly all of FMC's health and nutrition business, while divesting a portion of its crop protection business. The divestiture was made to win European Union approval for the company's merger with Dow Chemical. The companies were "progressing well" on pending regulatory approvals, Breen said. The deal is yet to be approved by the United States and China, among others.

Sales in DuPont's agriculture unit, which accounts for half of the company's revenue, rose 4 percent to $3.93 billion in the first quarter ended March 31, while operating earnings increased 12 percent. The seeds and chemicals maker is now focusing on selling directly to farmers in the United States, reducing its links with U.S. retailers and distributors. The switch has pushed the timing of some seed sales to the first quarter from the fourth. Demand was also propelled by late-season seed demand in South America and the planting of the largest combined corn and soybean acres on record in the United States.

DuPont on Tuesday forecast operating earnings of $2.90 per share for the first half of the year. Given that the company's first-quarter operating profit was $1.64 per share, above analysts' average estimate of $1.39, the company is likely to post $1.26 in the current quarter. That is lower than the $1.31 analysts are expecting, according to Thomson Reuters I/B/E/S.

A shift to more-profitable soybean among U.S. farmers is expected to weigh on demand for corn seeds, which make up a bulk of the DuPont's agriculture sales. Corn sales accounted for 47 percent of sales in DuPont's agriculture unit in 2016, while soybean made up only 16 percent.

Net income attributable to DuPont fell nearly 10 percent to $1.11 billion in the first quarter, hurt by one-time charges. Net sales rose 4.6 percent to $7.74 billion, beating estimates of $7.50 billion.