The "harsh" North American winter, and the turn by Brazil's
farmers away from second-crop corn, unsettled an agriculture-focused growth
drive by DuPont, which trimmed forecasts for its farm results.
The petrochemicals-to-pigments conglomerate said that most
of its divisions had raised profits in the January-to-March quarter, with the
industrial biosciences division helped by the raised demand for enzymes by the
US ethanol industry, whose margins have been supported by lower corn costs.
However, profits at the agriculture division, which the
group is prioritising for growth, fell 4.9% to $1.44bn, on sales down 5.9% at $4.39bn,
thanks largely to the impact of the cold and prolonged North American winter in
preventing early fieldwork, and allowing farmers to delay seeding decisions.
Farmers often delay until the last minute decisions of much
of their spring sowings, with decisions depending largely on relative pricing
of crops, and profitability prospects.
Divisional operating earnings declined "on lower seed sales
as a result of shifts in both timing and planted area", said DuPont, owner of
the Pioneer seeds business, reporting also "lower herbicide volumes" in North
Indeed, group-wide "adverse weather conditions reduced
first-quarter earnings by an estimated $0.07 per share, reflecting increased
operating costs and lost sales," equivalent to some $65m.
The comments echo those of Syngenta, the Swiss-based seeds
and agrichemicals giant, which on Wednesday noted an 11.0% drop in North
American spray revenues in the quarter and a 2.0% drop in regional seed takings as "US
growers delaying planting decisions".
And, like Syngenta, DuPont highlighted the impact of lower
plantings in Brazil of second-crop, or safrinha corn, sown early in the calendar
year typically on land vacated by the soybean harvest, but a boost to insecticide
sales in Latin America, where the Helicoverpa corn earworm moth caterpillar is
growing as a pest for a range of crops.
DuPont forecast an improved performance in agriculture in
the current April-to-June period, forecasting "significant growth in operating
earnings" as warmer weather encourages fieldwork and fulfils seed sales delayed
from the first quarter.
However, the group, which in January forecast agriculture sales
and earnings rising "modestly" in the first half of 2014, trimmed its expectations.
Sales will now prove "flat", while earnings "should be up
"Our first half outlook is now lower than our view was in January
as volumes will be further impacted by lower-than-expected corn plantings in
Brazil, North America and Ukraine," DuPont said.
Nonetheless, DuPont stuck by a forecast for group operating earnings
for 2014 of $4.20-4.55 per share.
Operating earnings for the January-to-March period came in
at $1.58 per share, a gain of $0.02 per share on the year-ago performance, and
bank in line with Wall Street forecasts.
DuPont shares stood $0.10 higher at $112.62 in morning deals
in New York.