DowDuPont’s 4Q17 Revenue Could Beat Analysts’ Estimates



DowDuPont’s 4Q17 revenue estimates

DowDuPont (DWDP) is expected to report revenues of $19.43 billion in 4Q17—an increase of 6.60% over the combined revenue of Dow Chemical and DuPont in 4Q16. The combined revenue of Dow Chemical and DuPont in 4Q16 was reported at $18.22 billion. After the merger, DowDuPont, which published its first earnings in November, posted strong proforma revenue of $ 18..3 billion. It remains to be seen if DowDuPont can deliver another quarter with good sales.

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Driving factors

The revenue growth is expected to be driven by improved prices, a volume increase, and a favorable currency. The higher volumes are expected to be driven by the electronics and imaging business, which recorded 13% growth in 3Q17. The packaging and specialty packages business reported 8% growth in 3Q17. Most of the business witnessed volume growth with the exception of a few businesses. The trend is expected to continue in 4Q17 as well. The demand across the regions looks positive, which could lead to volume growth. Improved prices are expected to boost DowDuPont’s revenue.

Weakness in the US dollar could push the revenues up. In 4Q17, the US Dollar Index, which is a measure against the basket of currencies, declined 1.0%. The US Dollar Index declined ~10.0% for fiscal 2017.

Some of the divestitures that were made to facilitate the merger could have a negative impact on DowDuPont’s 4Q17 revenues.

Investors looking for indirect exposure to DowDuPont can invest in the Materials Select Sector SPDR Fund (XLB), which invests 23.60% of its portfolio in DowDuPont. The fund also provides exposure to Monsanto (MON), LyondellBasell (LYB), and Air Products and Chemicals (APD) with weights of 7.50%, 5.50%, and 5.20% respectively, as of January 23, 2018.


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