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What Boosted DuPont’s Electronics & Communications Segment

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DuPont’s Electronics & Communications segment

DuPont’s (DD) Electronics & Communications segment, its fifth-largest revenue contributor, accounted for 6.6% of its revenue in 1Q17. The segment reported revenue of $510 million in 1Q17, representing a 3.4% increase YoY (year-over-year).

The segment’s revenue grew primarily due to improved demand in the consumer electronics and semiconductor markets, which resulted in higher volume growth. Also, the segment witnessed strong sales of photovoltaic material. However, the segment’s revenue was impacted by foreign currency hedging.

Operating earnings and margin

The Electronics & Communications segment reported a net income of $89 million in 1Q17, compared with $59 million in 1Q16, an increase of 51% YoY. The segment’s margin improved from 13% in 1Q16 to 17.4% in 1Q17, an increase of 440 basis points YoY. The segment’s income and margin improvements were primarily due to higher volumes and the difference of $16 million in litigation expenses paid in the previous year.

Segment’s outlook

The consumer electronics and semiconductor markets are expected to continue their upward trend. However, the photovoltaic business could see challenges resulting from reduced government subsidies and grid capacity issues in China.

Investors can indirectly hold DuPont by investing in the First Trust Indxx Global Agriculture ETF (FTAG), which has a 10.2% exposure to DuPont. Other top holdings of the fund include The Dow Chemical Company (DOW), Syngenta (SYT), and Monsanto (MON), which had weights of 10.1%, 4.8%, and 4.6%, respectively, as of April 25, 2017.

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