'Harsh' US winter trips up DuPont ag growth drive

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.

'Adverse weather conditions'

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 America.

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.

Outlook trimmed

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 slightly".

"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.

Group performance

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.

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