DowDuPont’s 1Q18 revenue estimates
DowDuPont (DWDP) is expected to report revenues of $21.42 billion in 1Q18—an increase of 2.1% over Dow Chemical and DuPont’s combined revenue in 1Q17. In 4Q16, the combined revenue was $20.97 billion. The 1Q17 revenue is on a reporting basis and not on a continuing business basis. Dow Chemical and DuPont have divested several businesses to facilitate the merger.
The projected growth is expected to be supported by growth in all of DowDuPont’s reporting segments. In 4Q17, volume growth was seen across all of DowDuPont’s reporting segments. The trend will likely be extended in 1Q18 as well. The Agriculture segment is expected to grow due to higher volumes driven by new launches like Rinskor and Arylex herbicides, Vessarya and Zorvec fungicides, Pyraxalt and Isoclast insecticides, Enlist corn and cotton, and Pioneer soybeans. The Materials segment is expected to continue its growth led by the Industrial Intermediates and Infrastructure business. The business is expected to have double-digit growth due to higher volumes and pricing. New capacity additions in the US Golf Coast and the Sadara ramp-up are expected to increase the revenue. The Specialty Products segment is expected to grow due to Nutrition and Biosciences. The volumes are expected to grow in bioactives, probiotics, and microbial control solutions.
DowDuPont’s revenue growth could be helped by the favorable foreign currency. The US dollar was still weak in 1Q18. The US Dollar Index, which measures the dollar’s movement against a basket of currencies, declined 2.3% in 1Q18.
Update on spin-off
During the quarter, DowDuPont declared the names for the intended spin-offs. The Agriculture segment will be called “Corteva Agriscience.” The Materials division will be called “Dow.” The Specialty segment will be known as “DuPont.” Dow will retain the Dow diamond logo as its brand.
Investors could get indirect exposure to DowDuPont by investing in the Vanguard Materials ETF (VAW). VAW has invested 16.4% of its portfolio in DowDuPont. VAW also provides exposure to Monsanto (MON), LyondellBasell (LYB), and Air Products and Chemicals (APD) with weights of 5.90%, 3.9%, and 3.90%, respectively, as of April 24.