Who Wins or Loses From DuPont's Warning?

Commodities & Metals

Published: June 27, 2014 12:20 pm

Last Updated: April 28, 2020 10:09 am

E.I. du Pont de Nemours and Co. (NYSE: DD), or simply DuPont, issued a warning on quarterly and full-year earnings after markets closed Thursday. The company said operating profits in the company’s agriculture and performance chemicals segments will be lower than originally forecast in the second quarter and that will affect the full-year’s profits.

Second-quarter operating earnings are now forecast to be “moderately below” second-quarter 2013 operating profit of $1.28 per share. The full-year outlook is dropping to a range of $4.00 to $4.10 per share. The announcement pushed shares more than 2% lower in after-hours trading Thursday.

DuPont said that sales of corn seed are down and that it has had to take larger-than-expected inventory write-downs on its seeds. Soybean sales are higher than expected but not high enough to offset the drop in corn volume.

Monsanto Co. (NYSE: MON) reported mixed results earlier this week, but the company raised its guidance based on higher sales of soybean seeds in South America. Corn seed sales were down 16% in the first calendar quarter, but soybean seed sales rose 24% and total seed sales were flat at $3.04 billion for the quarter. At DuPont, seed sales fell 6% to $4.4 billion. Monsanto shares were off 0.7% Friday morning, at $125.22 in a 52-week range of $94.00 to $128.79.

At Dow Chemical Co. (NYSE: DOW), first-quarter sales in its agricultural sciences segment were essentially flat at $2.12 billion. Dow’s products in this segment are primarily herbicides and crop protection products. Seed sales were off by 7%, led by lower corn and sunflower seed sales in Latin America and delayed sales in the United States due to the winter weather. Dow shares traded down 1.63% Friday morning to $51.28, in a 52-week range of $31.99 to $53.35.

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Fertilizer maker Agrium Inc. (NYSE: AGU) posted first calendar quarter sales that were down 2% overall. Crop nutrient sales were up 11.7% and crop protection sales were down 7% in the quarter. Sales were good in Australia and not so good in North America. The stock was down 0.3% Friday, at $91.86 in a 52-week range of $77.19 to $97.97.

Archer Daniels Midland Co. (NYSE: ADM) got a boost from its ethanol production in the first quarter, but its agricultural services business revenues rose just $2 million to $153 million, primarily due to the higher prices the company was able to charge for transportation due to the severe weather. Shares traded down about 0.6% Friday, at $43.68 in a 52-week range of $33.50 to $45.40.

Friday’s lower share prices indicate that investors believe that what happened with DuPont will happen with other agricultural product providers, at least in the near term. Producers and food packaging companies could also be affected by higher commodity prices going forward. There really is no good news for anyone in DuPont’s report.

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