) earnings for the first quarter of 2014 fell short of
expectations and its sales slipped as harsh winter weather
coupled with a shift in timing of seed shipments and lower corn
planted area in the Americas hit its core agriculture business in
the quarter. It also saw continued weakness in its struggling
performance chemicals business.
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The Delaware-based chemical giant posted adjusted earnings of
$1.58 per share in the reported quarter that trailed the Zacks
Consensus Estimate by a couple of cents but were ahead of $1.56
posted a year ago.
Adjusted earnings exclude charges associated with the separation
of the performance chemicals business and pension costs.
Unfavorable weather conditions reduced earnings in the reported
quarter by an estimated 7 cents per share.
Including one-time items, DuPont registered earnings from
continuing operations of $1.54 per share in the quarter compared
with $1.47 per share in the prior-year quarter. Consolidated net
income, as reported, slid 57% year over year to $1.4 billion,
affected by the sale of the company's performance coatings
business to private equity firm Carlyle Group.
Net sales for the reported quarter slipped around 3% year over
year to $10,128 million as the agriculture business saw lower
sales due to shifts in timing and planted area as well as bad
weather conditions. Unfavorable currency swings and lower selling
prices also reduced sales. Revenues also missed the Zacks
Consensus Estimate of $10,602 million.
DuPont saw margin gains across all segments barring performance
chemicals and agriculture in the quarter. Operating earnings from
the electronics business, which supplies materials for solar
panels in the photovoltaic industry, jumped 53% in the quarter.
The industrial biosciences unit recorded a 37% rise while safety
and protection posted a 27% gain. Nutrition and health raked in a
22% gain, but agriculture saw a 5% decline.
DuPont's cyclical performance chemicals division (includes the
paint pigment business) remains a chink in its armor. Lower
pricing for titanium dioxide (TiO2) continues to batter the
division, resulting in a 20% fall in operating profit in the
quarter. Separation of the unit remains on track.
DuPont backed its earnings expectations for 2014. Its shares,
which are up roughly 41% over a year, were inactive in
Lower volumes due to earlier seed shipments along with reduced
planted area led to a 6% year over year decline in revenues to
$4.4 billion in the reported quarter. These offset favourable
seed pricing and increased insecticide volumes in Latin America.
Electronics & Communications:
Sales fell 6% to $580 million in the quarter. However, volume
gains in photovoltaic markets contributed to a healthy
double-digit rise in operating earnings.
Sales rose 4% to $301 million on higher demand for enzymes for
Nutrition & Health:
Sales edged down 1% to $861 million. Productivity improvement,
better product mix and lower input costs led to a rise in the
division's operating earnings.
Sales fell 3% to around $1.5 billion. Operating earnings fell as
lower TiO2 and fluoroproducts prices coupled with higher raw
material and energy costs offset higher volumes.
Sales moved up 2% to roughly $1.6 billion on volume gains in the
automotive market, partly offset by increased ethane and natural
Safety & Protection:
Sales rose 4% to $947 million on higher volume and productivity
DuPont ended the quarter with cash and cash equivalents of
roughly $3.8 billion, down 42% year over year. Total borrowings
and capital lease obligations fell roughly 15% year over year to
around $11.3 billion.
DuPont, a Zacks Rank #3 (Hold) stock, reaffirmed its earnings
guidance for this year and continues to see adjusted earnings per
share in the band of $4.20 to $4.45, a 8%-15% year-over-year
rise. The current corresponding Zacks Consensus Estimate is
Moreover, DuPont expects to earn roughly 70% of its full year
operating earnings per share in the first half of 2014. The
guidance takes into account the expected improvement in global
industrial market demand.
DuPont, last month, outlined its growth strategies for its
agricultural seed business - DuPont Pioneer. The company expects
around half of the growth in the agriculture business to come
from outside of North America over the next five years, mostly in
major markets such as Latin America, Eastern Europe, India and
China where it has a strong foothold and looking for continued
Moreover, the recent roll out of the Encirca services platform
for farmers in the U.S., which marks an expansion to DuPont's
whole-farm decision services offerings, is expected to offer
meaningful opportunity in the long run and deliver annual peak
revenues of more than $500 million.
However, DuPont's TiO2 business remains hobbled by weak pricing.
The company is spinning off the performance chemicals unit as it
is gradually shifting its focus to high growth, less cyclical
businesses, including agriculture.
DuPont's results shed light on end-market scenario and demand
trend for chemical products. Its compatriot
), which will report on Apr 23, will offer some key insights on
how the chemical industry fared in the first three months of the
Among other major chemical names,
) is slated to come out with its first-quarter results on Apr 21
) will report after the close on Apr 24.