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High Volumes Drive up DuPont’s Agriculture Revenue in 1Q17

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DuPont’s Agriculture segment in 1Q17

DuPont’s (DD) Agriculture segment, its largest revenue contributor, accounted for 50.7% of its revenue in 1Q17. The segment reported revenue of $3.9 billion in 1Q17, which represents a 3.8% increase YoY (year-over-year).

During the quarter, the Pioneer brand continued its expansion and launched Xtend Soybeans. While the demand continued for Leptra insect protection, sunflower seeds, driven by a change in seed delivery timing, benefited the segment by contributing $140 million during the quarter. The segment’s revenue was boosted further by price increases in Brazil.

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Operating earnings and margin

The Agriculture segment reported a net income of $1.2 billion in 1Q17, compared with $1.1 billion in 1Q16—a 12.3% increase YoY. The segment’s margin improved from 29.1% in 1Q16 to 31.5% in 1Q17, an increase of 240 basis points YoY. The segment’s income and margin improvements were primarily due to increased sales volume and price increases.

Agriculture segment’s outlook

The segment is expected to continue its upward trend in the upcoming quarters, primarily driven by volume growth led by Leptra, and supported by sales of new products Xtend soybeans, FeXapan herbicide, and Zorvec fungicide. DuPont plans to launch Leptra in Argentina, and several other products in 2017.

Investors can indirectly hold DuPont by investing in the iShares US Basic Materials ETF (IYM), which has an 11.8% exposure to DuPont. Other top holdings of the fund include The Dow Chemical Company (DOW), Monsanto (MON), and Praxair (PX), which had weights of 12.0%, 8.5%, and 5.9%, respectively as of April 25, 2017.

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