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What’s behind DowDuPont’s Significant Revenue Growth in 4Q17?

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DowDuPont’s 4Q17 revenue

DowDuPont (DWDP) reported 4Q17 revenues of $20.1 billion, an increase of 13.1% over the proforma revenue of $17.7 billion in 4Q16. Analysts expected DWDP to report revenue of $19.4 billion. This was the first full quarter reported since the company’s merger. DWDP’s revenue grew significantly despite several divestitures to facilitate the merger.

DowDuPont’s revenue growth was due to 6% growth in volumes, favorable pricing, and positive currency translation due to continued weakness in the US dollar. DWDP’s revenue grew across all the business divisions led by Industrial Intermediates & Infrastructure and Packaging & Specialty Plastics, which grew in double digits. We’ll discuss each of the reporting segments under the expected spin-off headers in the next few parts.

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Update on spin-off

DowDuPont provided an update with regard to spin-offs during the quarterly results. DowDuPont expects to spin off into three companies. The company said the Material Science segment will be separated by 1Q19, while the Agriculture and Speciality Products segment will be spun off by June 1, 2019.

Management comments

Ed Breen, DowDuPont’s chief executive officer, said, “Our fourth quarter operating results continued the strong performance that we delivered throughout 2017, as we grew our top and bottom lines by double digits in the quarter and the full year. Our 2017 results reflect robust underlying demand for many of our products, the power of our innovation engine and our leading positions in growing markets.”

Investors can get indirect exposure to DowDuPont by investing in the Vanguard Materials ETF (VAW), which invests 17.7% of its portfolio in DowDuPont. VAW also provides exposure to Monsanto (MON), LyondellBasell (LYB), and Air Products and Chemicals (APD), which have weights of 5.4%, 3.9%, and 3.7%, respectively, as of February 2, 2018.

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