DuPont's agchem sales up 21% in second quarter
Date:07-29-2008
Strong demand for fungicides in Europe and insecticides worldwide contributed to a 21% rise in DuPont’s agrochemical sales in the second quarter of 2008. Revenues also benefited from favourable currency factors, the company points out.
Double-digit gains for each of the business units in DuPont’s agriculture and nutrition division resulted in a 22.5% increase in second-quarter sales to $2,541 million. A 15% gain from higher prices and a 9% volume rise were partly offset by a 1% reduction due to portfolio changes. The “better-than-expected” results made the division the “stand-out” business for DuPont in the second quarter, according to chief financial officer Jeff Kiefer.
High commodity prices supported demand for pesticides worldwide, resulting in record first-half sales for DuPont, notes Jim Borel, group vice-president of the agriculture and nutrition business. First-half sales of sulfonylurea herbicides amounted to “just over $600 million”, a 17% increase on the same period last year. Crop protection earnings increased “substantially” due to pricing and volume increases, and fixed cost productivity gains, Mr Borel points out. The gains more than offset higher raw material costs.
Strong sales of DuPont’s new insecticide, Rynaxypyr (chlorantraniliprole), have prompted the company to raise its forecasts for the product. It has doubled its sales target for 2009 to $100 million and raised its peak annual revenue target by about $100 million to $300 million. The company expects to reach this peak sales target in 2011, a year earlier than previously indicated.The insecticide has been registered in ten countries to date, with approvals in more than 20 countries expected by the end of the year.
DuPont’s seed subsidiary, Pioneer Hi-Bred International, recorded a 21% increase in second-quarter sales to $1,400 million. Maize seed sales were up by 16% and soybean seed sales were 26% higher than the same period a year ago. The company held its share of the North American maize seed market and improved its share of the soybean market by “about one percentage point” to 24%, Mr Borel says. Outside North America, seed sales were up by 23% in the second quarter and by 38% in the first six months of the year. Growth was driven by market share gains in Europe, particularly in Italy, Hungary and France.
Seed earnings were slightly lower than a year ago. Higher earnings from US maize seed and European operations were offset by lower profits from US soybeans. The latter was due to commodity cost increases and a $52 million charge on open soybean contracts. Without this charge, pre-tax operating income (PTOI) would have been “up in double digits”, Mr Borel points out.
Pioneer expects to see strong demand in southern hemisphere markets in the remainder of 2008, continued demand for oilseeds in Europe and a strong start to the 2009 season in North America, Europe and China. The company expects to launch its new “Y” series of high-yielding soybeans on 9 million acres (3.6 million ha) in the US next year, which would be the largest product launch in Pioneer’s history, Mr Borel points out. The “Y” series is seen as a platform to launch the multiple herbicide-tolerant Optimum GAT soybeans, which were deregulated by the USDA in July.
DuPont expects each of its agriculture and nutrition businesses to deliver “double digit” sales and earnings growth in 2008. Without the non-recurring $25 million earnings gain in the third quarter of 2007, second-half PTOI should be about the same as last year. However, full-year PTOI should be “at least” 20% higher than in 2007, Mr Borel forecasts.
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DuPont’s agricultural product1 results ($ million)
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2nd qtr ended June 30th
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2007
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% change
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2008
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Sales
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2,074
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+22.5
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2,541
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PTOI2
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428
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+17.8
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504
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Six months
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|
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Sales
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4,524
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+19.9
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5,424
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PTOI2
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1,079
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+19.6
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1,290
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1 includes agrochemicals, seed and nutrition products; 2 pre-tax operating income.
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