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What Happened to DuPont’s Agriculture Segment in 2Q16?

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Segment revenue

E.I. du Pont de Nemours’ (DD) Agriculture segment is the company’s largest revenue contributor. In 2Q16, the segment reported revenue of $3.22 billion, representing 45.6% of DuPont’s total revenue.

Revenues remained stagnant compared to 2Q15. But the segment posted operating earnings of $865 million in 2Q16 as compared to $772 million in 2Q15, implying a YoY (year-over-year) increase of 12%.

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Segment highlights

  • The overall sales volume in this segment increased by 3% YoY.
  • Foreign currency translations negatively impacted the segment by -2%.
  • The corn seed business grew by 1% on YoY.
  • Crop protection witnessed lower sales volumes due to insect-resistant soy seed.

3Q16 and full-year outlook for the segment

  • DuPont expects challenging market conditions specifically in Latin America and the Middle East.
  • The company expects 3Q16 revenue to be lower. However, expects operating earnings to be up by mid 20%, mainly driven by cost savings and lower product costs.
  • It will launch its Leptra corn hybrids in Brazil in 3Q16.
  • DuPont expects its full-year revenue to be in line with 2015 revenues.
  • The company expects this segment’s operating margin to be higher, driven by cost savings and product mix.

Investors can indirectly hold DuPont by investing in the iShares US Basic Materials ETF (IYM), which had 11.1% of its portfolio in DuPont on July 27, 2016. Its top holdings include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX), which had weights of 11%, 8.5%, and 6.2%, respectively, in IYM.

In the next part, we’ll look at DuPont’s Nutrition and Health segment.

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