April 23, 2012

Prompt US, Europe corn sowings growth at DuPont

In helping the chemicals conglomerate push through price rises while lifting sales volume, DuPont followed rivals in revealing a boost to seed sales from the rapid start to the spring sowing season in the US and Europe too.

The US-based paints-to-pesticides group reported a 4% rise to US$1.49 billion in earnings for the January-March quarter, on sales up 11.9% at US$11.3 billion. The earnings, equivalent to an underlying US$1.61 per share, beat market expectations of a US$1.55-a-share result.

And the improvement was led by the agriculture division, which raised revenues by 16.4% to US$4.08 billion, and pre-tax operating profits by 18.3% to US$1.31billion, making it by far the group's biggest contributor.

The performance of the agriculture division, which includes the Pioneer seed business, reflected a "strong start" to spring plantings in North America, where official data earlier this week confirmed corn sowings at a near-record pace.

However, DuPont also flagged a "strong, early start" to the sowing season in Europe, where data from RMI showed spring barley seedings were near-completed at the end of March.

Indeed, group seed sales for the quarter soared 20% to US$3.2 billion, reflecting higher prices and volumes, and eclipsing a 7% rise to US$900 million in takings from agrichemicals.

Nonetheless, DuPont, which flagged particular strength in sales of its Rynaxypyr insecticide, achieved higher prices of agrichemicals too "across the portfolio", contrasting with the weaker market conditions prevalent until last year.

DuPont, whose statement follows upbeat results from rivals Monsanto and Syngenta, said that its strength in agriculture sales would extend to results for the April-June quarter too, in which it forecast takings rising by a "mid-teens" percentage.

Sales of seeds look set to be "underpinned by a strong finish to the North American and European planting seasons", while agrichemical sales were seen "significantly higher, on northern hemisphere market conditions and new products".

However, the division's rate of earnings growth will slow to a "mid-single-digit" level, DuPont said. DuPont shares closed down 1.2% at US$52.61.