Wettest Spring Ever Crimps DuPont Agriculture EarningsSimon Casey and Christopher Donville
The wettest spring on record in parts of the U.S. is crimping profit at DuPont Co., the country’s largest chemicals producer, and affecting industries from packaging to construction.
DuPont said today its first-half operating profit per share will drop about 10 percent from a year earlier, compared with an April projection for a decline of 7 percent to 9 percent, because of the impact of wetter, cooler weather on its agriculture and nutrition and health units.
“While weather often seems more of an excuse than explanation, it is worth noting just how different the spring of 2013 has been versus a year ago,” analysts at Jefferies Group LLC said in a June 11 note. “Weather can impact transportation, building, repair and maintenance, infrastructure, and some consumer activities.”
Deere & Co. last month cut its full-year equipment sales forecast after weather slowed demand for its construction and turf-care machinery in North America. Ball Corp., a maker of food and beverage packaging, said June 5 that the conditions haven’t helped its business, with “softer” volumes continuing in the second quarter from the first three months of 2013.
About 17.67 inches (44.9 centimeters) of rain fell in Iowa, the biggest U.S. corn producer, from March 1 through May 31, the most in state records that began in 1873, according to Harry Hillaker, the state climatologist.
Fargo, North Dakota, has had the wettest ever start to the year, according to state data going back to 1881.
DuPont fell 0.6 percent to $53.88 at the close in New York. The Wilmington, Delaware-based company said today in a statement ahead of a presentation at a conference in Chicago that full-year earnings per share will be at the low end of a previously stated forecast of $3.85 to $4.05.
The average of 20 analysts’ estimates compiled by Bloomberg is for profit of $3.86 a share excluding one-time items.
DuPont’s second-quarter sales volumes at its agriculture unit, which makes crop seeds and pesticides, may increase 2 percent from a year ago, Andrew Cash, an Atlanta-based analyst at Suntrust Robinson Humphrey, said in a note today. His previous estimate was for an 8 percent increase.
“March to May 2013 has been the wettest spring in nearly 120 years across the farm belt states of Iowa, Illinois and Indiana,” Chief Financial Officer Nicholas Fanandakis said in his company’s statement.
Wet weather in the U.S. may also affect the earnings outlook for fertilizer producers, Spencer Churchill, a Toronto-based analyst at Paradigm Capital Inc., said in a telephone interview.
“The level of caution about the weather impact is creeping up there,” he said today.