DOW AgroSciences Combined Regional Sales 2017
Combined Regional Sales
Dow AgroSciences combined sales of their Crop Protection, Speciality Chemicals business and the Seeds and Traits business grew 3.3% in Q2, with changes effected by volumes 6%, prices (3%) and currency +0.3%.
For the H1 2017 sales declined 0.8% with changes from volumes 1%, prices (1.8%). Growth was led by North America with +8% growth for the quarter and 1.5% for H1 2017. For the corresponding quarter and 6-month period Latin America grew 1.1% and 0.7%, EMEAI declined 4.5% and 5.6%%; Asia-Pacific declined 1.1% and 6%.
The outlook for 2017 is positive with growth expected between 1%-2% mainly arising from Latin America, USA and Europe.
Combined Divisional Profitability
Combined segment EBIT in Q2 2017 was $285 million growing strongly by 39%, and by 4.6% during the H1 2017 period. The Crop Protection segment operating profits grew by 39% in Q2 and 2.8% in H1 2017 while Seeds+Traits grew by 32.6% in Q2 and 6.3% in H1.
Profits grew largely from higher volumes derived from new herbicides based on halauxifen-methyl/florasulam mixtures and 2,4-D choline mixtures and new insecticides based on sulfoxaflor. Trait revenues from premiums on trait-bearing seeds as well from licensing contributed to the profits overall. In addition currency strengthening in Brazil and eastern Europe contributed to growth. But for the first 6 months lower pricing in most markets drove sales but reduced profitability slightly. But were offset by the cost control measures in place.
EBITDA grew correspondingly by 43% to $326 million in Q2 and by 7% to $677 million before special items in H1 2017. This declined severely by 67% for the H1 2017 period due to $469 million litigation expenses and compensation to Bayer CropScience for infringement of they latter’s patented technology.
New herbicide-tolerant and insecticidal trait varieties of soybean which are approved in Latin America should help drive sales and profitability from H2 2017 as seen during the last quarter. Expect to see synergy changes only by the end of H1 2018 when the combined entity of DowDuPont will have the added task of chopping and changing in functions of the areas of manufacturing, marketing, selling and general admin, along with general staff to achieve “cost synergies” promised to shareholders. These will be planned and announced over the next few months.
The processor businesses being divested has already begun with DuPont’s offer of insecticides and cereal herbicides to FMC and Dow’s planned sales of corn seeds businesses in Latin America.
Research & Development
R&D spending in Q2 increased by 4.1% , while growing marginally by 0.8% for H1 2017. Crop Protection spending increased by 2.5% for the quarter, but decreased by 1.9% for H1 201.
Seeds & Traits spending grew by 5.5% in Q2 and by 3.1% during H1 2017. Expenditure on Crop Protection & Speciality Chemicals was mainly on development work for regulatory approvals for their new herbicides and insecticide products. There will of course be many changes implemented as the DowDuPont merger proceeds, with further “Cost synergies” in R&D and other areas.
Increased spending for “refuge-in-bag” seeds, and Conquesta™ stacked traits insect-resistant soybeans for Latin America and the Enlist™ system traits to expand from cotton to corn and soybeans in USA and Canada, with PowerCore ™ for Latin America and the EU seeds business.
Dow Group corporate spending and investment in R&D is now transferred to and is part of each department’s responsibility.