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Brazil woes, US soy seed drop deepen DuPont ag losses

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DuPont said it was "confident" in long-term prospects for agriculture despite a quadrupling in losses at its farm division, hurt by a reduced share of the US soybean market, besides by the weak Brazilian real.

The US conglomerate, for which the July-to-September quarter is typically a weak one for its agrichemicals and seeds division, reported a particularly soft performance this time, with operating profits hitting $210m, up from $56m as year before.

The decline, on revenues down 30% at $1.09bn, was attributed largely to the weakness of the Brazilian real, which has discouraged farmers in the South American agricultural powerhouse from buying imported crop inputs, besides cutting the value in dollar terms of DuPont's takings in the country.

"Demand for seed and crop protection products, primarily in Brazil, further weakened in the quarter impacted by macroeconomic and competitive pressures," said DuPont, owner of the Pioneers seeds business.

"In Brazil, where the planting season is in progress, tighter farmer profit margins and credit are causing growers to be more cautious in their spending."

'Lower market share'

The comments echoed those from peers such as FMC Corp and Syngenta which have also highlighted setbacks in Brazil.

However, DuPont also unveiled a particular setback, in weaker volumes of soybean seeds despite higher sowings of the oilseed in the US this year and forecast in Brazil too – not least because, in fixing its own nitrogen, it is far less expensive crop to grow than corn, its main rival for acres.

"Soybean seed volumes were lower in Brazil and in North America where adverse weather for late-season planting lowered area expectations," the group said.

"We did lose a couple of points of North America market share in soybeans."

Remaining in the red

And DuPont forecast continued operating losses in the current, October-to-December period, which is usually a stronger for the agriculture division, which last year reported earnings of $134m for the period.

"We expect strong headwinds from macroeconomic and competitive pressures to continue," the group said, forecasting a percentage decline of "low teens" in divisional sales, and an operating loss of "about $100m".

"Local pricing gains are expected to be more than offset by currency, lower crop protection volumes in Brazil, and the continued impact of the shutdown of LaPorte," an insecticide plant in Texas where four workers were killed by a chemicals leak a year ago.

'Confident in long-term growth'

However, DuPont said that it "while markets remain challenging, we are confident in long-term growth in demand for agricultural products", and in the group's pipeline of seed and agrichemicals products.

The group flagged prospects for its Cyazpyr insecticide, which has received approval by "additional countries", and the prospective launches of its Zorvec fungicide and Pyraxalt rice pesticide.

And in seeds, the group highlighted an "aggressive ramp-up plan" for corn seed in Brazil, and in the US for new soybean seed too.

"We are very excited about what growers are experiencing this harvest season with our newest classes of T Series soybeans which we expect to represent about 80% of next year's sales volume."

'Not pleased'

The comments came as the group overall reported operating earnings of $117m for the July-to-September quarter, a drop of 67% year on year, on revenues down 17% at $4.87bn.

"We are not pleased with our results this quarter," said Nick Fanandakis, the DuPont finance director.

However, the earnings, at $0.13 per share, exceeded market expectations of a $0.10-per-share result.

DuPont shares stood 1.9% higher at $61.51 in morning deals in New York.


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