DowDuPont reported strong results for the fourth quarter and 2017 and announced a speeded-up timetable for spinning off the giant company into three parts.
The company was aided by stronger economies throughout the world.
Adjusted earnings per share for the fourth quarter increased 41 percent to $0.83 a share compared with pro forma adjusted earnings per share in the year-ago period of $0.59.
The company updated the timing and sequence of the intended separation of the companies: Materials Science is expected to separate by the end of the first quarter of 2019, and Agriculture and Specialty Products are expected to separate by June 1, 2019.
The ag and Specialty Products operations are slated to be headquartered in Delaware. Materials Science, which will carry the Dow name will be based in Michigan. No name has been selected for the ag and Specialty Product operations.
The company has kept headquarters in Michigan and near Wilmington in preparation for the spin-off.
Net sales increased 13 percent to $20.1 billion, with gains in all operating segments and geographies, from pro forma net sales of $17.7 billion in the year-ago period. The primary sales growth drivers by division were: Materials Science – Industrial Intermediates & Infrastructure (27 percent) and Packaging & Specialty Plastics (17 percent); Specialty Products – Transportation & Advanced Polymers and Nutrition & Biosciences (10 percent each); and Agriculture (5 percent).
Regional sales increases were led by Europe, the Middle East and Africa ( (25 percent) and North America (10 percent), with gains in all divisions, led by the Materials Science operating segments.
DowDuPont announced it is increasing its cost savings commitment from $3 billion to $3.3 billion.
Fourth quarter GAAP results include net tax benefits of $1.1 billion as a result of new U.S. tax legislation. The company expects this new legislation to translate into a 1-2 percentage point reduction in its 2018 tax rate versus previous expectations.
“Our fourth quarter operating results continued the strong performance that we delivered throughout 2017, as we grew our top and bottom lines by double digits in the quarter and the full year,” said Ed Breen, CEO of DowDuPont. “Our 2017 results reflect robust underlying demand for many of our products, the power of our innovation engine and our leading positions in growing markets. We delivered these results while completing our merger, realigning the business around key end-markets, and achieving more than $800 million in run-rate savings from our cost synergy programs. Based on the progress we’ve made, we are raising our commitment for cost synergies from $3 billion to $3.3 billion, an increase of 10 percent. We also are making significant progress standing up the intended public companies, which we now expect to spin about 14 to 16 months from today.”
For 2017, GAPP (Generally Accepted Accounting Principles) earnings per share from continuing operations was $0.95.
Pro forma adjusted earnings per share increased 22 percent to $3.40 versus the year-ago period. Pro forma adjusted earnings per share excludes significant items totaling net charges of $1.90 per share, as well as a $0.33 per share charge for DuPont amortization of intangible assets.
GAAP net sales increased 30 percent. Pro forma net sales increased to $79.5 billion, up 12 percent versus the year-ago period, with gains in all operating segments and all geographies. Primary sales growth drivers were: Materials Science – Performance Materials & Coatings (37 percent), Industrial Intermediates & Infrastructure (17 percent) and Packaging & Specialty Plastics (13 percent); Specialty Products – Transportation & Advanced Polymers (14 percent) and Electronics & Imaging (12 percent); and Agriculture (2 percent). Sales rose double-digits in EMEA (17 percent), Asia Pacific (15 percent) and North America (10 percent). Sales in Latin America grew 5 percent.
Less than two weeks following the merger‘s closing DowDuPont announced portfolio adjustments to the Materials Science and Specialty Products divisions that ended up being a net gain for the Delaware-based spin-off.
DowDuPont met regulatory remedies required of the merger transaction, including: divesting DuPont’s cereal broadleaf herbicides and chewing insecticides portfolios, as well as certain parts of its crop protection R&D pipeline and organization to FMC. The company also closed its acquisition of FMC’s Health and Nutrition business that includes a plant in the Newark area.
“The trajectory of global economic expansion has gained momentum – driven by robust fundamentals in consumer and business confidence, employment and wage growth and manufacturing and infrastructure investment activity,” said Andrew Liveris, executive chairman of DowDuPont. “In developed economies in particular, such as the United States, Germany, France, Canada and the U.K., we continue to see strong leading indicators of broad-based growth. Furthermore, early signs from the business community point to U.S. tax reform as a catalyst for further domestic capital investments, which will take advantage of enhanced competitiveness and pro-business incentives. Adding to this, the emerging middle class in developing economies, most notably in India and China, but also in Africa and the Middle East, continues to support sustainable growth.”
