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Why Did DuPont’s Industrial Biosciences Segment Revenue Fall in 2Q16?

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Segment revenue

E.I. du Pont de Nemours’ (DD) Industrial Biosciences segment is the company’s lowest revenue contributor. For 2Q16, the segment reported revenues of $355 million, representing 5% of the company’s total revenue.

In 2Q15, the segment reported revenue of $357 million, implying a decline in revenue by 0.5% on a YoY (year-over-year) basis. The segment posted operating earnings of $62 million, as compared to $50 million in 2Q15. This implies an increase of 24% YoY.

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Segment highlights

  • Overall sales volume in this segment remained flat.
  • Clean technologies, which provide solutions in the areas of clean air and clean fuel, sales declined due to weak demand from sulfuric acid producers. This was offset by growth in bio actives.
  • Foreign currency translations impacted revenues by 1% in 2Q16.
  • Operating earnings increased due to cost saving measures.

3Q16 and full-year outlook

  • DuPont expects this segment’s 3Q16 revenue to grow marginally as they expect volume growth in bio actives.
  • Cost-saving measures will likely continue to drive the operating earnings in the upward direction in 3Q16.
  • The company expects its full-year revenue to be flat on volume growth but expects a decline in clean technology sales and negative currency impacts on the segment.

Investors can indirectly hold DuPont by investing in the PowerShares S&P 500 Quality Portfolio (SPHQ), which had ~1.5% of its portfolio in DuPont on July 27, 2016. SPJQ’s other holdings include Dow Chemical (DOW), Monsanto (MON), and LyondellBasell (LYB), which have weights of 1.32%, 1.13%, and 0.92%, respectively.

In the next part, we’ll look into DuPont’s Protection Solutions segment.

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