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Analyzing DuPont’s Nutrition and Health Segment in 2Q17

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DuPont’s Nutrition and Health segment in 2Q17

DuPont’s (DD) Nutrition and Health segment is the company’s third-largest revenue generator. The segment accounted for 11.0% of DuPont’s revenue in 2Q17—compared to 11.80% in 2Q16. It was a big fall in terms of revenue contribution. The Nutrition and Health segment reported revenue of $818 million—a decrease of 2.0% on a YoY (year-over-year) basis. In 2Q16, the segment’s revenue stood at $835 million.

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The segment’s revenue fell primarily due to lower volumes in systems and texturants and protein solutions. The decision to exit a few low margin markets had a negative impact on the segment’s revenue. On the other hand, probiotics witnessed tremendous growth of more than 20% in 2Q17. The growth was primarily due to higher demand in Asia-Pacific and North America.

Operating income and margins

The segment’s operating income was $135 million in 2Q17—an increase of 3.80% on a YoY basis. In 2Q16, the segment’s operating income stood at $135 million. The rise in the segment’s operating income was primarily due to strong growth in probiotics. By exiting the lower margin business, the segment’s margin also improved.

The Nutrition and Health segment reported an operating margin of 16.50% compared to 15.60% in 2Q16—an increase in the margin by 90 basis points on a YoY basis.

Investors looking for exposure to DuPont can invest in the ProShares Ultra Basic Materials (UYM), which has invested 7.70% of its portfolio in DuPont. The fund has also invested in Praxair (PX), Ecolab (ECL), and Air Products and Chemical (APD) with weights of 4.0%, 3.6%, and 3.30%, respectively, as of July 25, 2017.

In the next part, we’ll discuss how the Protection Solutions segment performed in 2Q17.

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