DuPont's (DD) Q3 Earnings Top Estimates, Ups FY16 EPS View
Zacks Investment Research | Oct 25, 2016 01:46AM ET
DuPont (NYSE:DD) logged forecast-topping earnings in third-quarter 2016, supported by its aggressive cost-reduction actions. The company saw improved operating margins across its business segments in the quarter.
The Delaware-based company recorded adjusted earnings of 34 cents per share in the reported quarter, up from 13 cents per share a year ago. The results trounced the Zacks Consensus Estimate of 21 cents. Operating costs (as adjusted) fell 14% year over year in the quarter.
On a reported basis, DuPont posted earnings from continuing operations of a penny per share for the quarter, down from 14 cents per share a year ago.
DuPont raked in net sales of $4,917 million for the reported quarter, up roughly 1% year over year. That beat the Zacks Consensus Estimate of $4,879 million. A 3% increase in volumes on higher demand across performance materials, agriculture and nutrition & health businesses offset a 2% decline in prices in the quarter.
Segment Review
Agriculture: Revenues rose 2% year over year to around $1.1 billion in the reported quarter. Segment operating loss was $189 million, a 10% year over year improvement as higher volumes, favorable currency impact and cost savings more than offset reduced local price and increased product costs.
Electronics & Communications: Sales went down 7% to $493 million in the quarter. Operating earnings for the segment rose 4% year over year to $108 million as cost savings more than offset reduced demand and sustained weakness in consumer electronics.
Industrial Biosciences: Sales went up 5% to $392 million. Earnings jumped 28% to $78 million as benefits from cost-saving actions and higher demand in bioactives and biomaterials more than offset reduced volume in CleanTech.
Nutrition & Health: Sales rose 2% to $823 million. Operating earnings shot up 32% to $135 million on volumes gains, cost reduction actions and lower product costs.
Performance Materials: Sales moved up 2% to around $1.3 billion. Operating earnings rose 17% to $371 million as cost savings, higher demand in automotive markets and lower product costs more than offset unfavorable currency impact.
Protection Solutions: Sales were flat year over year at $722 million. Operating earnings rose 11% to $162 million on the back of cost savings and higher volumes.
Financials
DuPont ended the quarter with cash and cash equivalents of roughly $4.5 billion, up around 36% year over year. Total borrowings and capital lease obligations rose around 15% year over year to roughly $11.4 billion.
Get The News You Want
Outlook
DuPont raised its adjusted earnings guidance for 2016. The company now sees adjusted earnings for 2016 to rise 17% year over year to $3.25 per share, an increase from its earlier view of $3.15-$3.20 per share. The company now expects full-year earnings (on a reported basis) to be roughly $2.71 per share.
DuPont continues to expect benefit of 64 cents per share from its 2016 global cost savings and restructuring plan. Unfavorable currency impact on full-year operating earnings is expected to be 15 cents per share. Headwinds from a higher base tax rate are expected to be roughly 7 cents per share.
DuPont is taking aggressive cost-cutting actions amid a still challenging backdrop. The company remains on track to attain $1 billion in cost savings on a run-rate basis by end-2016.
DuPont is moving ahead with its planned mega-merger with Dow Chemical (NYSE:DOW) . The companies agreed to combine their businesses in late 2015 in an all-stock deal to create a chemical titan dubbed “DowDuPont”, before eventually breaking up into three independent companies through tax-free spin-offs.
The deal secured approvals from shareholders of both companies in July and is now subject to customary closing conditions including receipt of regulatory clearances. The European Commission (EC), in August, started a Phase II review for the planned merger of equals of the two companies.
The EU antitrust regulators resumed their investigation into the merger earlier this month after suspending their scrutiny in September due to lack of data. The EC is expected to complete the investigation by Feb 6, 2017.
The planned merger is projected to deliver cost synergies of around $3 billion, expected to be achieved with the first two years after the deal closure. DuPont and Dow are working constructively with regulators in key jurisdictions and expects the deal to complete in first-quarter 2017.
DuPont carries a Zacks Rank #3 (Hold).
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.