Flooding, softer plastics market lower earnings forecast as Dow splits off


Flooding in the Midwest and softer results in plastics and packaging are expected to have a negative effect on DowDuPont’s first quarter results.

The company begins its three-way split today, with Materials Science separating into Dow, a publicly traded company. The ag unit (Corteva) and DuPont will spin off later this year.

Corteva and DuPont will be based in northern Delaware.

DowDuPont now expects first-quarter net sales to be down high-single digits (versus previous guidance of down mid-single digits) and expects operating income to be down by a high-teen percentage(versus previous guidance of being down low-teens percentage) when compared to the previous quarter last years.

The company’s guidance for the first quarter:

  • Agriculture to be split off as Corteva later this year:Flooding during the month of March in the Midwest has led to a federal disaster declaration. Transportation disruptions throughout the region and significant road closures have halted farming operations, limited the ability to deliver products to customers, and delayed pre-season applications. As a result, Division net sales for the first quarter of 2019 are expected to be down 4 – 6 percent and earnings (before taxes, interest and depreciation) is expected to be down $125 to $150 million from the same quarter last year. An assessment of the full year impact will be provided with the upcoming first quarter earnings release.
  • Materials Science (Dow): Net sales are expected to be down in the low-teens percent (versus previous guidance of down high-single digits) and earnings (before taxes, interest, and depreciation) is expected to be down in the mid-20s percentile) (versus previous guidance of being down in low-20s) The midpoint of the division’s updated guidance results in approximately $100 million lower operating earnings before interest, taxes and depreciation)versus previous guidance, driven primarily by greater-than-expected margin in Packaging & Specialty Plastics.
  • Specialty Products (to be spun off as DuPont later this year):Net sales and operating earnings before taxes interest and depreciationare expected to be in line with previous guidance.
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