DowDuPont shares drop on flat sales and possible slowdown in economic growth

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DowDuPont reported flat sales and operating income in the fourth quarter.

The company missed Wall Street sales estimates, with shares tumbling nine percent as the company offered a more cautious worldwide outlook for 2019

General Accepted Accounting Principles net income from Continuing Operations totaled $513 million. Operating EBITDA ( Earnings Before Interest, Taxes, Depreciation and Amortization) was $3.9 billion basically unchanged from the year-ago period.

Cost cuts and efficiency gains (synergy) and local price gains were offset by lower margins in the Materials Science Division, lower equity earnings and currency adjustments. Materials Science is comprised of Dow operations that were affected by swings in commodity and oil prices.

Materials Science is slated to be spun off and carry the Dow name. Specialty Products will be spun off under the DuPont name. The combined Dow and DuPont agricultural business will be spun off under the Corteva name.

DowDuPont returned $2.3 billion to shareholders in the quarter through dividends and share repurchases.DowDuPont intends to complete its remaining open share repurchases in the first quarter of 2019. Since the merger closing, DowDuPont has returned nearly $10 billion to shareholders.

CEO Edward Breen said, “In our first full year as a merged company, we delivered consistently strong results. Pro forma sales rose 8 percent with gains in every geography. We delivered a 13 percent increase in operating EBITDA. And we raised our cost synergy expectation by 20 percent to $3.6 billion, while continuing to return significant capital to shareholders.”

Breen continued, “We remain on track for the separation of the new Dow on April 1, followed by Corteva from the new DuPont on June 1. We are excited about launching these three global companies, each set to be an industry leader with the right capital structure and now better positioned to serve customers, compete in their end markets and focus on their innovation priorities. We’ve also put in place strong leadership teams who are singularly focused on capitalizing on their competitive advantages and delivering on their substantial growth and cost synergy opportunities to create value.”

“We expect global economic expansion to continue in 2019 at a moderately slower pace than 2018,” said Howard Ungerleider, chief financial officer of DowDuPont. “We continue to closely monitor macroeconomic and geopolitical developments, including ongoing trade negotiations and the pace of economic activity in China. In this environment, we remain focused on the actions in our control, including capitalizing on our growth investments, capturing cost synergy savings, delivering productivity actions and advancing our spin milestones.”

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