DuPont’s Performance Materials segment in 2Q17
DuPont’s (DD) Performance Materials segment is the company’s second-largest revenue generator. The segment accounted for 18.60% of DuPont’s total revenue in 2Q17—compared to 18.90% in 2Q16. In 2Q17, the Performance Materials segment reported revenue of $1.38 billion—an increase of 3.40% on a YoY (year-over-year) basis. In 2Q16, the segment reported revenue of $1.33 billion.
The segment’s revenue growth was primarily driven by higher volumes due to the strong demand for polymers from the automotive industry—led by Vamac and Hytrel elastomers. The segment witnessed high demand for high-performance parts in the semiconductor and aerospace business—led by Kalrez and Vespel brands. An increase in polymer prices, driven by higher raw material costs, also helped increase the segment’s revenue.
Operating income and margin
The segment reported operating income of $329 million in 2Q17—an increase of 1.20% on a YoY basis. In 2Q16, the segment reported operating income of $325 million. The marginal rise in the operating income was driven by higher volumes and a price increase. On the other hand, an increase in raw material prices and the negative impact of a planned maintenance of ethylene cracker limited the segment’s operating income.
In 2Q17, the Performance Materials segment’s margin stood at 23.80%—compared to 24.30% in 2Q16, which implies a decline of 50 basis points in the operating income’s margin.
Investors can hold DuPont indirectly by investing in the Vanguard Materials ETF (VAW). VAW has invested 8.50% in DuPont. The fund’s other holdings include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX) with weights of 9.3%, 5.90%, and 4.40%, respectively, as of July 25, 2017.
In the next part, we’ll see how the Nutrition and Health segment performed in 2Q17.