DuPont announced first quarter GAP earnings of $1.52 per share and operating earnings of $1.64 per share on April 25. Prior year GAAP and operating earnings were $1.39 per share and $1.26 per share, respectively.
First quarter sales were $7.7 billion, up 5% versus prior year on a 4% benefit from volume and a 1% benefit from local price.
Volume grew in almost all segments, led by Performance Materials, Electronics & Communications and Agriculture. Agriculture sales were positively impacted by the change in timing of seed deliveries, which benefitted first quarter sales by approximately $140 million. This timing change benefitted total company net sales by 2%.
“Our team delivered strong operational performance in the first quarter, growing operating EPS by 30%,” said Ed Breen, Chairman and CEO. “ The strength of our new product introductions and increased demand in key markets together resulted in top-line increases in almost every business. We also made significant progress on key milestones in the merger with Dow, including receipt of conditional approval from the European Commission and an agreement with FMC to divest certain crop protection assets and acquire substantially all of its Health & Nutrition segment. We continue to expect to close the merger in August of this year and quickly begin working on the 500-plus projects already identified to deliver the targeted $3 billion in cost synergies.”
The following is a summary of business results for each of the company’s reportable segments comparing first quarter with the prior year, unless otherwise noted.
- Agriculture – First quarter 2017 operating earnings of $1,236 million increased $135 million, or 12%, on local price and volume growth. Pricing growth was realized by double-digit increases in Brazil driven by the company’s newest corn hybrids and increased sunflower seed sales in Europe. Volume growth was driven by an approximately $140 million benefit from the change in timing of seed deliveries, increased insecticides and sunflower seed sales partially offset by a decrease in expected corn acreage in North America.
- Electronics & Communications – First quarter 2017 operating earnings of $89 million increased $30 million, or 51%, on volume growth and the absence of a $16 million prior year litigation expense. Volume growth was driven by increased demand in consumer electronics and semiconductor markets, as well as stronger photovoltaic material sales. Operating earnings included a gain on the sale of a business offset by costs associated with a legal matter.
- Industrial Biosciences – First quarter 2017 operating earnings of $75 million increased $12 million, or 19%, on volume growth, improved joint venture performance and cost savings, partially offset by declines in CleanTech. Volume growth reflected increased demand for biomaterials in apparel and carpeting and bioactives in the grain processing market.
- Nutrition & Health – First quarter 2017 operating earnings of $121 million increased $17 million, or 16%, on plant productivity, mix enrichment and cost savings. Volume growth in probiotics and emulsifiers was offset by declines in protein solutions and systems and texturants.
- Performance Materials -First quarter 2017 operating earnings of $355 million increased $82 million, or 30%, driven by higher volumes and cost savings. Increased demand for polymers in automotive markets, specialty copolymers growth in packaging and timing benefits from the second quarter 2017 drove increased volumes. Overall volume growth was constrained by lower ethylene sales as the business prepares for a planned turnaround of the ethylene cracker in the second quarter.
- Protection Solutions – First quarter 2017 operating earnings of $177 million increased $1 million, or 1%, as volume growth and cost savings offset higher raw material costs, unfavorable mix and lower plant productivity. Volume growth reflected improved demand for Nomex thermal-resistant fiber in oil and gas and mass transportation markets partially offset by declines in Kevlar high-strength materials, Tyvek protective materials and surfaces.
First Half 2017 Outlook
The company expects first half 2017 GAAP earnings per share of about $2.42, a decrease of about 5% from prior year. First half 2017 operating earnings per share are expected to be about $2.90, an increase of about 16% versus prior year primarily driven by sales growth. The increase in sales is due to the impact of the change in timing of seed deliveries, primarily related to the southern U.S route-to-market change in agriculture, and strength in global automotive markets. These benefits are anticipated to be partially offset by the expected reduction in planted corn acres in North America and higher product costs in Performance Materials and Agriculture.
The company’s first half 2017 GAAP earnings includes an expected net charge of about $0.32 per share for significant items primarily related to transaction costs associated with the planned merger with Dow. Prior year GAAP earnings included a net benefit of $0.20 per share from significant items, primarily due to a gain on the sale of an entity.