How DowDuPont Guidance Looks Ahead of the Split

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Chemical giant DowDuPont Inc. (NYSE: DWDP) has provided an update for its modeling guidance for the first quarter of 2019, as a result of near-term trends and discrete headwinds in some of its key value chains in the Agriculture and Materials Science divisions.

Look for this first-quarter earnings release on May 2.

The firm now expects first-quarter 2019 net sales to be down a high-single digits percentage (versus previous guidance of down a mid-single digits percentage). DowDuPont also expects operating EBITDA to be down a high-teens percentage (versus previous guidance of down a low-teens percentage), both versus the same quarter last year.

Key drivers of the company’s updated modeling guidance for the first quarter included the following:

  • Agriculture: Flooding during the month of March in the Midwestern region of the U.S. has culminated in a federal disaster declaration for the region. Transportation disruptions throughout the region and significant road closures have halted farming operations, limited the ability to deliver products to customers, and delayed pre-season applications. As a result, Division net sales for the first quarter of 2019 are expected to be down 4 – 6 percent and operating EBITDA is expected to be down $125 – $150 million, as compared to the same quarter last year. An assessment of the full year impacts, accounting for delays in first quarter customer deliveries along with expected recoveries, will be provided with the upcoming first quarter earnings release.
  • Materials Science: Net sales are expected to be down low-teens percent (versus previous guidance of down high-single digits percent) and operating EBITDA is expected to be down mid-20s percent (versus previous guidance of down low-20s percent). The midpoint of the Division’s updated guidance results in approximately $100 million lower operating EBITDA versus previous guidance, driven primarily by greater-than-expected margin compression globally in Packaging & Specialty Plastics.
  • Specialty Products: Net sales and operating EBITDA are expected to be in line with previous guidance.

Shares of DowDuPont were last seen down nearly 2% at $51.81, in a 52-week range of $48.89 to $71.93. The consensus price target is $66.74.


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