DowDuPont Reports First Quarter 2019 Results

DowDuPont reported its first quarter 2019 results.
 
Net sales of $19.6 billion were down 9% compared with the year-ago period on lower local price of 4%, a 3% currency headwind and volume declines of 2%. Volume gains of 3% in Asia Pacific and 1% in EMEA were more than offset by volume declines in US & Canada of 7% and in Latin America of 1%.
 
GAAP earnings per share from continuing operations totaled $0.23, a decline of 51% versus the year-ago period of $0.47. Adjusted earnings per share decreased 25% to $0.84, compared with the year-ago period of $1.12.
 
GAAP net income from continuing operations totaled $0.6 billion, down 50% versus the year-ago period. Operating EBITDA was $4.0 billion, down 17% as compared to the year-ago period.
 
DowDuPont achieved year-over-year cost synergies of approximately $400 million in the quarter, and since merger close has now delivered more than $2.2 billion of cost savings.
 
“Each business aggressively managed the levers within our control and benefitted from the strong foundations we have put in place in the face of discrete headwinds, including the effects of unprecedented bad weather, margin compression in key value chains, and sluggish auto and smartphone market conditions. Our emphasis on innovation and valued-added, higher margin products enabled us to benefit from stronger pricing in both our Specialty Products and Agriculture Divisions. We also advanced our cost synergies with an additional $400 million of savings in the quarter and we completed our $3 billion share repurchase program, repurchasing $1.6 billion in the quarter,” said Ed Breen, CEO of DowDuPont.
 
“In 30 days, we expect to complete our journey to create three leading companies in the materials science, agriculture and specialty products industries from the combination of two world-class organizations. I am confident that each of the companies we have created is a compelling investment opportunity in their respective space, with attractive financial characteristics and capital allocation policies, best-in-class cost structures and innovation priorities to accelerate growth,” Breen added.
 
Materials Science net sales were $10.8 billion, down 10% versus the year-ago period. Operating EBITDA of $1.9 billion, down 24% versus the same quarter last year.
 
Performance Materials & Coatings net sales were $2.3 billion, down 2% versus the year-ago period. Volume increased 1%, with growth in Asia Pacific and EMEA, and price was flat with the year-ago period. Currency decreased sales by 3%. Consumer Solutions sales were flat with the year-ago period as gains in volume and local price were offset by currency headwinds in EMEA and Asia Pacific.
 
Coatings & Performance Monomers reported a sales decline on lower volume, local price and currency, in part due to shedding of lower margin business and weather-related delays to seasonal demand in the US & Canada and EMEA regions.
 
Operating EBITDA was $481 million, down 18% from operating EBITDA of $586 million in the year-ago period, primarily due to lower prices for siloxanes and shipping restrictions from a Performance Monomers facility in Deer Park, TX, due to a fire at a nearby third-party storage and terminal facility.
 
Industrial Intermediates & Infrastructure net sales were $3.4 billion, down 8% versus the year-ago period. Volume grew 6%, with gains in all regions. Local price declined 11% with decreases in all regions and both businesses. Currency decreased sales by 3%. Operating EBITDA was $448 million, down 31% from operating EBITDA of $654 million in the year-ago period.
 
Packaging & Specialty Plastics net sales were $5.1 billion , down 15% versus the year-ago period. Volume contracted 2%, driven primarily by higher ethane feedstock usage in the US, which reduced sales of Hydrocarbons & Energy co-products.
 
The Packaging and Specialty Plastics business grew volume on higher demand in Asia Pacific and EMEA, supported by new capacity adds. End-market growth was led by Industrial & Consumer Packaging and Flexible Food & Specialty Packaging. Operating EBITDA was $993 million, down 24% from operating EBITDA of $1 .3 billion in the year-ago period.
 
Specialty Products net sales totaled $5.4 billion, a decline of 3% versus the year-ago period. Organic sales were flat with the year-ago period with strength in industrial, medical, life & personal protection, water and health & nutrition end-markets offsetting softness in automotive, smartphones and North America energy markets. Operating EBITDA of $1.6 billion was flat with the year-ago period.
 
Electronics & Imaging reported net sales of $1.1 billion, down 7% from the year-ago period driven by volume and currency headwinds of 6% and 1%, respectively. Local price was flat with gains in the US & Canada offset by declines in Asia Pacific and EMEA. Operating EBITDA for the segment was $385 million , a decrease of 3% from $398 million in the year-ago period.
 
Organic sales growth in the US & Canada and EMEA was more than offset by declines in Asia Pacific. Double-digit volume growth in Display Technologies was more than offset by declines in Interconnect Solutions and Photovoltaic and Advanced Materials. Soft smartphone demand, impacting both Interconnect Solutions and Semiconductor Technologies, and continued weakness in photovoltaics were the primary drivers of the volume decline.
 
Nutrition & Biosciences reported net sales of $1.7 billion, down 4% from the year-ago period. Volume gains in Nutrition & Health were more than offset by softer volumes in Industrial Biosciences. Operating EBITDA for the segment was $390 million, down 7% from operating EBITDA of $418 million in the year-ago period on higher raw materials and a currency headwind, which more than offset cost synergy savings.
 
Transportation & Advanced Polymers reported net sales of $1.4 billion, down 5% from the year-ago period. Operating EBITDA for the segment totaled $414 million , a decrease of 5% from $437 million in the year-ago period.
 
Safety & Construction reported net sales of $1.3 billion, up 2% from the year-ago period. Volume gains of 4% were driven by continued strength across industrial, life & personal protection and medical end markets, resulting in strong growth in the Water Solutions business, Tyvek protective garments and Kevlar high-strength materials, more than offsetting continued softness in North America residential construction demand. Volume increased in all regions.
 
Operating EBITDA for the segment totaled $411 million , an increase of 16% from $354 million in the year-ago period.
 
Agriculture net sales of $3.4 billion decreased 11% from the year-ago period. In the quarter, volume declined 7%, price increased 1%, and currency was a headwind of 5%, largely driven by the Euro, other Eastern European currencies and the Brazilian Real. Operating EBITDA of $667 million decreased 25% from the year-ago period, driven by the impact of decreased sales in the corn belt.