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A Look at DuPont’s Protection Solutions Segment in 1Q17

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DuPont’s Protection Solutions segment in 1Q17

DuPont’s (DD) Protection Solutions Segment, its fourth-largest revenue contributor, accounted for 9.6% of its revenue in 1Q17. The segment reported revenue of $747 million in 1Q17, representing a 2.5% increase over the $729 million seen in 1Q16.

The recovery in the oil and gas market pushed boosted demand for Nomex fibers, driving the segment’s volume growth and overall revenue up. On the other hand, for Kevlar, which is used for US military vehicle armor, sales remained flat. Tyvek, a protective material, also witnessed lower sales due to a decline in demand for medical packaging.

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Operating earnings and margin

The protection solutions segment reported a net income of $177 million in 1Q17, almost flat compared with $176 million in 1Q16. However, the segment’s margin fell from 24.1% in 1Q16 to 23.7% in 1Q17, a 40-basis-point margin contraction

Segment’s outlook

Sales growth is expected from the Nomex and Tyvek brands while Kevlar’s lackluster performance is expected to continue. Investors can indirectly hold DuPont by investing in the SPDR SSGA Gender Diversity Index ETF (SHE), which has invested 2.3% of its portfolio in DuPont. Other top holdings of the fund include Pfizer (PFE), Amgen (AMGN), and 3M (MMM), which had weights of 6.5%, 3.9%, and 3.8%, respectively as of April 25, 2017. In the next part, we’ll look at analysts’ recommendations for DuPont.

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