Weak Brazil Volumes, Prices Hit DowDuPont Results
DowDuPont reported its quarterly net profit dropped 29%, despite higher sales, as costs rose.
The company announced actions to generate $3 billion in cost savings, designed to integrate the organization post-merger and create strong foundations for the three intended companies. The majority of the work will come from procurement strategies, global workforce reductions, buildings and facilities consolidations and select asset shutdowns, among other activities. It did not specify actions among individual units.
Net sales in the third quarter for the company as a whole rose 23% to $15.4 billion, compared with $12.5 billion a year ago, including all business units.
The Agriculture segment reported pro forma net sales of $1.9 billion, down from $2 billion a year ago. Pro forma volume and local price declines of 5% and 4%, respectively, more than offset portfolio and currency benefits. Volume and pricing headwinds were driven by weakness in Latin America as sales channels continue to hold high inventory levels of crop protection products. Additionally, an expected reduction in corn area in Brazil, as well as a delayed start to its summer season, impacted sales in the region.
These headwinds were partly offset by continued penetration of new products, including Arylex herbicide, Vessarya fungicide, Leptra corn hybrids, and Isoclast insecticide.
Portfolio gains in the quarter reflect the Dow AgroSciences corn seed remedy in Brazil, which is expected to close in the fourth quarter. Per Securities & Exchange Commission guidelines, the results of the Brazil corn remedy have been removed from pro forma results prior to the merger close date, but will remain in reported results from the merger close date until the transaction has closed.
Pro forma operating EBITDA for the segment was a loss of $239 million, versus a loss of $172 million in the year-ago period. Lower product costs, favorable currency, portfolio changes, and lower pension/OPEB costs were more than offset by reduced volume and price, particularly due to weakness in Brazil.
DowDuPont said it began advancing its playbook to deliver $1 billion in growth synergies. For example, its Agriculture business will leverage its enhanced multi-brand, multi-channel approach designed to provide customers more value through broader choices and whole farm solutions.