DuPont Income Up 11% On Agriculture Gain
22 July 2008 Growth in DuPont Co.’s agriculture segment led a reported 11% increase in second-quarter net income. Record crop prices boosted pesticide and genetically modified seeds sales for the third largest US chemical producer, with profits rising 18% in the agricultural unit.
Price increases averaging about 7% partially offset an estimated 15% rise in costs for energy, raw materials, and freight, according to the company.
“What’s driving the bus here is ag and nutrition,” Soleil Securities/Gulley & Associates analyst Mark Gulley said, which helped the Wilmington, Delaware-based DuPont to its “modest beat” over Wall Street’s expectations. Gulley explained that cool, wet spring weather in the US corn belt “created a bumper crop of weeds and disease,” boosting sales of fungicides and herbicides, while flooding in the area that wiped out many crops allowed DuPont to sell even more seeds.
Net income increased to $1.08 billion, or $1.18 a share, up from $972 million, or $1.04 a share, a year earlier. The latest results included a 7-cent benefit from a litigation settlement and lower tax rate. In April, DuPont forecast second-quarter earnings of about $1.05 a share.
International revenue increased 18% overall and made up 60% of DuPont’s total sales, while US sales were up 5%, mostly because of higher prices, in what the company termed a weak market. Sales in emerging economies increased 23%, said spokesman Carl Lukach.
DuPont maintained its market share in US corn seed at 30% and gained in soybeans, Lukach said. He also reported that agriculture sales gained 23% to $2.54 billion, with corn-seed sales rising 13% and both soybeans and crop protection chemicals increasing 25%.
DuPont is expanding outside the US and investing in its Pioneer unit, which is the world’s second-largest seed producer. DuPont is counting on continued large growth in the agriculture market, with hopes that earnings per share in the unit will rise 15% on average through 2010.
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