DuPont’s Nutrition & Health segment in 1Q17
DuPont’s (DD) Nutrition & Health Segment, its third-largest revenue contributor, accounted for 10.2% of its revenue in 1Q17. The segment reported revenue of $789 million in 1Q17, a decline of 1.5% from the 1Q16 revenue of $802 million.
The sales volume decline in protein solutions and systems and texturants impacted the segment’s revenue in 1Q17. This effect was extended by foreign exchange hedging. However, on the positive side, probiotics and emulsifiers saw volume growth.
Operating earnings and margin
The Nutrition & Health segment reported a net income of $121 million in 1Q17, compared with $104 million in 1Q16, an increase of 16.3% YoY (year-over-year). The segment’s margin improved from 13% in 1Q16 to 15.3% in 1Q17, an increase of 230 basis points YoY. The segments income and margin improvements were primarily due to improved productivity and cost savings.
Although volume growth in probiotics and emulsifiers is expected to continue, growth in protein solutions and systems and texturants may pose a problem. Also, foreign currency translation challenges remain and could impact the segment’s revenue.
Investors can indirectly hold DuPont by investing in the ProShares Ultra Basic Materials ETF (UYM), which has invested 8.3% of its portfolio in DuPont. Other top holdings of the fund include The Dow Chemical Company (DOW), Monsanto (MON), and Praxair (PX), which had weights of 8.4%, 6.0%, and 4.1%, respectively, as of April 25, 2017. In the next part, we will analyze the Performance Materials segment’s performance in 1Q17.