DuPont Profit Tops Estimates on Record Earnings From Agriculture

DuPont Co. (DD), the largest U.S. chemical company by market value, posted first-quarter earnings that exceeded analysts’ estimates as profit from crop seeds and pesticides hit a record and pigment demand began to recover.

Profit excluding the auto-paint unit, which was sold in February, and payments to settle claims that Imprelis herbicide damaged trees was $1.56 a share, Wilmington, Delaware-based DuPont said in a statement today. That beat the $1.53 average of 18 estimates compiled by Bloomberg. The shares rose 4.1 percent to $52.49 in New York, the biggest gain since November 2011.

DuPont maintained its full-year forecast for operating earnings of $3.85 to $4.05 a share, a gain of 2 percent to 7 percent. The average estimate of 20 analysts was $3.92. Higher earnings won’t be realized until the second half, as DuPont said first-half operating profit will drop 7 percent to 9 percent because of a decline in its performance chemicals business, which makes paint pigment.

Chairman and Chief Executive Officer Ellen Kullman, who agreed last month to pay Monsanto Co. at least $1.75 billion over a decade to license new herbicide-tolerant soybeans, is focusing on products that help meet demand for food, energy and security. Sales at the agriculture unit rose 14 percent on corn seed sales in North America and Brazil, boosting operating earnings in the unit 13 percent to a record $1.52 billion.

Photographer: Larry W. Smith/Bloomberg

Bags of DuPont Co.'s drought-tolerant "Pioneer" corn seeds are transported in preparation for planting on a farm near Hays, Kansas. Close

Bags of DuPont Co.'s drought-tolerant "Pioneer" corn seeds are transported in... Read More

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Photographer: Larry W. Smith/Bloomberg

Bags of DuPont Co.'s drought-tolerant "Pioneer" corn seeds are transported in preparation for planting on a farm near Hays, Kansas.

Corn Seed

“Agriculture was certainly a strong performer,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors who rates the shares hold, said by telephone today. “Relative to estimates, the beat came from better-than-expected results in performance chemicals.”

DuPont also said today it raised its quarterly dividend to 45 cents a share from 43 cents.

First-quarter net income, which included a one-time gain from the sale of the auto-paint unit, climbed to $3.35 billion, or $3.58 a share, from $1.49 billion, or $1.58, a year earlier. Sales rose to $10.4 billion from $10.2 billion.

Revenue was strongest in North America, where higher prices and sales volumes contributed to an 8 percent gain, DuPont said. Sales rose 4 percent in Latin America and fell 8 percent in the Asia-Pacific region. Europe, the Middle East and Africa declined 1 percent.

DuPont’s first-half forecast implies profit growth of 13 percent to 21 percent in the second half, a seasonally weak period for agriculture, Ahmed said. That means DuPont expects titanium dioxide, which has dragged down results for several quarters, will rebound in the second half, he said.

Titanium Dioxide

Sales volumes of titanium dioxide, the white pigment known by its chemical formula TiO2, were “essentially” unchanged from a year earlier and rose 8 percent from the fourth quarter, DuPont said. The pigment business should “stabilize” by midyear and improve after that, Kullman said on a conference call today.

First-quarter operating profit at the performance chemicals unit, the world’s largest maker of TiO2, fell 56 percent to $251 million as prices declined, the company said.

Corn seed producers such as DuPont and Monsanto are benefiting as farmers prepare to sow what the U.S. Department of Agriculture estimates will be 97.3 million acres, the most since 1936.

Items excluded from adjusted first-quarter profit include $35 million to resolve Imprelis tree-damage claims and non- operating pension costs. Imprelis charges now total $785 million and may rise to $900 million, DuPont said.

DuPont, founded in 1802 to make gunpowder, produces thousands of products from Corian countertops and Teflon coatings to Tyvek weather barrier and Kevlar anti-ballistic fiber.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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