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DowDuPont’s 1Q18 Earnings Beats Expectations

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DowDuPont’s 1Q18 earnings

DowDuPont (DWDP) announced its 1Q18 earnings before the market opened on May 3. It reported adjusted earnings per share (or EPS) of $1.12, an increase of 6.7% over its pro forma adjusted earnings per share of $1.05. The company beat the analysts’ adjusted earnings per share estimate of $1.10. In this series, we’ll look at DowDuPont’s earnings, revenues, and segment-wise performance.

DowDuPont’s (DWDP) adjusted earnings per share exclude several one-time charges related to inventory step-up amortization, integration and separation costs, and restructuring charges of $0.54 per share. Apart from this, the company included another charge of $0.11 per share in amortization charges on DuPont’s intangible assets.

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Several factors increased DowDuPont’s 1Q18 adjusted earnings per share. Its price growth in all segments and volume growth, with the exception of the Agriculture segment, were the key contributors to this increase. Favorable foreign currency and higher equity earnings helped drive the company’s earnings up.

During the quarter, DWDP realized $300.0 million through cost savings synergy, which was reflected in its selling, general, and administrative (or SG&A) expenses as a percentage of sales. DWDP reported SG&A expenses of ~$1.7 billion, which comprised 8.0% of its 1Q18 revenues compared to 8.8% in 1Q17 on a pro forma basis. This represents savings of 80 basis points on a year-over-year basis. 

Stock price reaction

Although DowDuPont (DWDP) posted better-than-expected earnings, its stock price remained flat and closed at $63.47. The markets (DJIA) also remained flat. Among DWDP’s peers, Monsanto (MON) and LyondellBasell (LYB) fell about 0.10% and 0.80%, respectively. Eastman Chemical (EMN) gained 0.20% on the same day.

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