DuPont Closes Solae Deal - Analyst Blog

By Zacks Equity Research,

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Chemical giant EI DuPont de Nemours & Co. ( DD ) announced the completion of the acquisition of the remaining portion of Solae, LLC joint venture from Bunge. Previously, DuPont owned 72% of the joint venture while the remaining 28% was owned by Bunge. DuPont entered into the joint venture in 2003 to expand its position in the food ingredients market.

A global leader in developing soy-based ingredients for nutritious and healthy products, Solae offers solutions that deliver a unique combination of functional, nutritional, economical and sustainable benefits to DuPont's customers.

DuPont believes the pre-tax earnings margins of its nutrition and health business will be closer to the upper end of its long-term target of 12%-14% with the full control of Solae. Besides, the company's customers will get the benefit of increased speed of innovation, food formulation and nutrition science capabilities across a vast range of specialty food ingredients.

Recently, DuPont reported adjusted earnings of $1.61 per share for the first quarter of 2012, exceeding the Zacks Consensus Estimate of $1.55. The earnings growth was primarily driven by strong performance in Agriculture and Performance Chemicals and the benefit of prior-year acquisitions in Nutrition & Health and Industrial Biosciences. Including one-time items (customer claim charges of $50 million), earnings came in at $1.57 per share versus $1.52 in the prior-year quarter. 

Sales grew 12% to $11,230 million in the first quarter, driven by price hikes and strong sales in the Agriculture segment. However, it missed the Zacks Consensus Estimate of $11,239 million. The sales volumes for Agriculture segment increased across all regions. However, sales volumes for other segments remained flat in Asia.

DuPont reiterated its full-year 2012 earnings outlook of $4.20 to $4.40 per share, an increase of 7% to 12% compared with 2011, excluding significant items. 

We currently have a long-term Neutral recommendation on DuPont. The company, which competes with The Dow Chemical Company ( DOW ) and BASF SE ( BASFY ) , maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

BASF SE (BASFY): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BASFY , DD , DOW , EI

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