Danisco acquisition pads profits at DuPont and better prices offset rising costs

DOVER, Del. – DuPont got strong performances from its agricultural and performance chemicals units and its acquisition of Danish food maker Danisco last year contributed to an increase in first-quarter earnings.

The company, based in Wilmington, Del. reported net income of $1.49 billion, or $1.57 per share, for the quarter that ended March 31, compared to $1.43 billion, or $1.52 per share, for the first quarter of last year.

Excluding a one-time pretax charge of $50 million for claims related to its weed killer Imprelis, DuPont says it earned $1.61 a share for the quarter.

Analysts, who typically exclude one-time charges, expected $1.55 per share, according to a poll by FactSet.

Federal environmental regulators ordered DuPont to halt sales of Imprelis last year because of reports of damage to trees, particularly evergreens, which resulted in several lawsuits against the company. DuPont said Thursday that it has charged a total of $225 million for Imprelis claims as of March 31, and that it believes total charges could range as high as $575 million. The company intends to seek recovery from insurance carriers for costs exceeding $100 million.

However, sales for the quarter grew 12 per cent to $11.2 billion, as higher local prices and portfolio changes helped offset lower volumes.

Sales in the agriculture unit rose $16 per cent, or $576 million, to $4.1 billion, reflecting 8 per cent higher volumes and 8 per cent price increases.

The company said its seed sales performance was led by strong North American corn sales, an early start to the European growing season and commercial success in Brazil’s season for safrinha corn.

The acquisition of Danisco helped send pretax operating income in DuPont’s nutrition and health unit soaring to $83 million, from $25 million.

Sales in the nutrition and health unit jumped 149 per cent to $808 million as the result of acquiring Danisco’s specialty food ingredients business. The Danisco acquisition also generated sales of $288 million and pretax operating income of $41 million for DuPont’s new industrial biosciences unit.

“DuPont’s market-driven science and commitment to innovation and productivity are winning in key markets, despite economic headwinds early in the first quarter,” said CEO and chairwoman Ellen Kullman.

“We are prioritizing our R&D portfolio to deliver food, energy and protection solutions for the world’s growing population,” she added.

On a global basis, The DuPont Co. saw sales increase by 23 per cent in Latin America, with 15 per cent higher local selling prices and a 4 per cent volume gain. Volumes fell by 13 per cent in Asia-Pacific region, however, and were essentially flat in North America, Europe, Africa and the Middle East.

Sales were off by 17 per cent in the electronics and communications unit as volumes fell 18 per cent amid weak demand for photovoltaics that was partially offset by increased demand for smart phones and tablets.

Continued softness in the market for titanium dioxide, a whitening pigment used in a broad range of products was reflected in 10 per cent lower volumes in the performance chemicals unit, although 16 per cent higher selling prices offset the drop in volume.