Why DowDuPont Is Driving the Dow Lower

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DowDuPont Inc. (NYSE: DWDP) released its fourth-quarter financial results before the markets opened on Thursday. The firm posted $0.88 in earnings per share (EPS) and $20.1 billion in revenue. Consensus estimates had called for $0.88 in EPS and revenue of $20.92 billion. In the same period of last year, the industrial giant said it had EPS of $0.81 and $20.07 billion in revenue.

During the quarter, DowDuPont achieved cost synergy savings of more than $500 million, and since the merger close has delivered more than $1.8 billion of cumulative savings.

The company returned $2.3 billion to shareholders in the quarter through dividends ($0.9 billion) and share repurchases ($1.4 billion). It intends to complete its remaining open share repurchases in the first quarter of 2019.

In terms of its segments, the firm reported as follows:

  • Agriculture had net sales of $2.82 billion.
  • Performance Materials & Coatings had net sales of $2.20 billion.
  • Industrial Intermediates & Infrastructure had net sales of $3.70 billion.
  • Packaging & Specialty Plastics had net sales of $5.87 billion.
  • Electronics & Imaging had net sales of $1.17 billion.
  • Nutrition & Biosciences had net sales of $1.63 billion.
  • Transportation & Advanced Polymers had net sales of $1.32 billion.
  • Safety & Construction had net sales of $1.34 billion.

Looking ahead, management only talked about the separation of the company coming this summer and did not mention any numbers in the report. However, the consensus estimates call for $1.25 in EPS and $22.64 billion in revenue for the current quarter.

Ed Breen, CEO of DowDuPont, commented on the future of the company:

We remain on track for the separation of the new Dow on April 1, followed by Corteva from the new DuPont on June 1. We are excited about launching these three global companies, each set to be an industry leader with the right capital structure and now better positioned to serve customers, compete in their end markets and focus on their innovation priorities. We’ve also put in place strong leadership teams who are singularly focused on capitalizing on their competitive advantages and delivering on their substantial growth and cost synergy opportunities to create value both now and over the long-term.

Shares of DowDuPont closed Wednesday at $59.28, in a 52-week range of $48.89 to $76.00. The consensus price target is $72.63. Following the announcement, the stock was down over 8% at $54.35.

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