Value Line is regarded as the best independent research available. More than just recommendations, Value Line provides the rationale behind its picks for greater understanding.
- Don D., California
Dow 30 Earnings: DuPont- First Quarter 2011
Shares of diversified chemicals manufacturer DuPont (DD - Free DuPont Report) remained relatively flat following the company's first-quarter earnings release. The top-line advanced roughly 18%, to $10 billion, thanks largely to solid volume growth and price hikes. This strength was broadbased, with all segments experiencing double-digit percentage growth. Gains in emerging markets were particularly strong. The healthy sales performance and improved productivity served to offset rising raw materials costs. Overall, share net came in at $1.52, 23% higher than the prior-year tally.
Meanwhile, the company has agreed to acquire Danisco, a global enzyme and specialty food ingredient business, for $6.3 billion. This move ought to establish Du Pont as a leader in the field of industrial biotechnology and should prove accretive to earnings from 2012 onward.
The Agriculture and Nutrition segment should be an important growth driver in the coming years. Seed sales should continue to benefit from healthy North-American demand for the Pioneer brand and PROaccess products. Crop protection product sales will likely benefit from an increased focus on higher-value harvests and efforts to serve developing markets. We look for healthy growth from most of the company's other operating segments, as well. This includes the Electronics & Communications and Performance Chemicals businesses. The Safety & Protection line should continue to experience healthy demand for aramid and nonwoven products in industrial markets. Moreover, efforts to control operating expenses ought to support margins. The company has raised its bottom-line estimate for the full year. As a result, we now expect revenues and share earnings of $36 billion and $3.75, respectively, for 2011. Our bottom-line call excludes a potential charge of $0.30-$0.45 a share related to the upcoming acquisition of Danisco. Looking further out, we anticipate healthy growth in revenues and share earnings from 2012 onward. This assumes further improvement in economic activity and strengthening industrial markets.
About The Company: DuPont is engaged in science and technology in a range of disciplines, including high performance materials, electronics, safety and security, and biotechnology. The company operates on a global scale, manufacturing a wide range of products for distribution and sale to many different markets, including automotive, construction, agricultural, medical, protective apparel, electronics and nutrition.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.