DowDuPont reported net sales of $5.7 billion in the second quarter of 2018, increased 25 percent from pro forma net sales of $4.6 billion in the year-ago period, driven by sales recovered from weather-related delays to the Northern Hemisphere planting season, local price gains and double-digit growth in insecticides.
Volume rose 20 percent, local price grew 4 percent and currency added 1 percent. Operating EBITDA of $1.7 billion rose 45 percent versus pro forma operating EBITDA of $1.2 billion in the prior-year period.
Volume growth primarily reflected sales recovered from weather-related delays to the start of the planting seasons in U.S. & Canada and EMEA, which benefited both Seed and Crop Protection, partly offset by lower expected planted area in U.S. & Canada. Price increases were driven by Seed from continued penetration of new corn hybrids and A-series soybeans. Total insecticide sales continued their growth trend and increased nearly 20 percent in the quarter, driven by strong demand creation efforts against competitive chemistries for Spinosyn™ products, and new product launches.
“Conditions in the U.S. corn belt have clearly changed for the better in recent months,” Kevin McCarthy, an analyst at Vertical Research Partner, said ahead of the earnings release. “After a slow start, domestic planting progress has caught up nicely.”
Operating EBITDA improvement reflected volume growth in U.S. & Canada and EMEA, higher selling prices in Seed, cost synergies, currency benefits and lower pension/OPEB costs, partly offset by lower expected planted area in U.S. & Canada, higher soybean royalty costs, increased research and development spending to continue advancing the pipeline and investments in digital platforms.
First half 2018 results
First half net sales of $9.5 billion decreased 1 percent from pro forma net sales of $9.6 billion in the year-ago period. Local price improvement of 2 percent and currency benefits of 2 percent were more than offset by a volume decline of 5 percent. Price increases reflected continued penetration of new products, such as A-series soybeans. The volume change was driven by lower expected planted area in U.S. & Canada and a reduction in safrinha area in Brazil, partly offset by new product launches in Crop Protection, such as Arylex™ herbicides and Isoclast™, Pyraxalt™ and Spinosyn™ insecticides. Insecticide sales in the first half continued to perform well with 17 percent growth versus prior year.
Fewer acreage of corn in Brazil and the United States, DowDuPont chief financial officer Howard Ungerleider said, may cause some headwinds for the division this year along with a low Brazilian Real.
Operating EBITDA of $2.6 billion was down 2 percent versus the same period last year. Cost synergies, favorable currency, lower pension/OPEB costs and sales gains in Crop Protection were more than offset by higher soybean royalty costs, lower expected planted area in U.S. and Canada, a weaker safrinha season, and investments to support new product launches and digital platforms.