DowDuPont Inc. in Midland Reports 2017 Net Income of $4B Following Merger

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With the backdrop of one of the largest mergers in recent times, the new DowDuPont Inc. in Midland today announced $62.5 billion in net sales last year, up from $48.2 billion in 2016 when Dow Chemical was a standalone company. During the same annual periods, net income was $4.0 billion last year, up from $1.5 billion in 2016.

At the same time, the company today announced that it has updated the timing and sequence of the intended separation of the companies: Materials Science is expected to separate by the end of the first quarter of 2019, and Agriculture and Specialty Products are expected to separate by June 1, 2019.

“Our 2017 results reflect robust underlying demand for many of our products, the power of our innovation engine and our leading positions in growing markets,” says Ed Breen, CEO of DowDuPont. “We delivered these results while completing our merger, realigning the business around key end-markets, and achieving more than $800 million in run-rate savings from our cost synergy programs.

“Based on the progress we’ve made, we are raising our commitment for cost synergies from $3 billion to $3.3 billion, an increase of 10 percent. We also are making significant progress standing up the intended public companies, which we now expect to spin about 14 to 16 months from today.”

2017 Full-Year Highlights

  • GAAP earnings per share from continuing operations was $0.95. Pro forma adjusted earnings per share increased 22 percent to $3.40 versus the year-ago period. Pro forma adjusted earnings per share excludes significant items totaling net charges of $1.90 per share, as well as a $0.33 per share charge for DuPont amortization of intangible assets.
  • GAAP net sales increased 30 percent. Pro forma net sales increased to $79.5 billion, up 12 percent versus the year-ago period, with gains in all operating segments and all geographies. Primary sales growth drivers were: Materials Science – Performance Materials & Coatings (37 percent), Industrial Intermediates & Infrastructure (17 percent) and Packaging & Specialty Plastics (13 percent); Specialty Products – Transportation & Advanced Polymers (14 percent) and Electronics & Imaging (12 percent); and Agriculture (2 percent). Sales rose double-digits in EMEA (17 percent), Asia Pacific (15 percent) and North America (10 percent). Sales in Latin America grew 5 percent.
  • Pro forma operating EBITDA increased 15 percent to $16.2 billion, driven by volume and price gains, including new capacity additions; cost synergies and productivity actions; higher equity earnings; lower pension/OPEB costs; and the full-year contribution of silicones. These gains more than offset higher feedstock costs, startup expenses on the U.S. Gulf Coast and the unfavorable impact of hurricanes. Increases were achieved in most operating segments, led by double-digit growth in Performance Materials and Coatings; Industrial Intermediates & Infrastructure; Electronics & Imaging; Transportation & Advanced Polymers; and Agriculture.
  • Less than two weeks following merger close, DowDuPont announced certain targeted portfolio adjustments to the Materials Science and Specialty Products divisions to better align with end-markets and further enhance the competitive advantages of the intended companies.
  • DowDuPont satisfied key regulatory remedies required of the merger transaction, including: divesting DuPont’s cereal broadleaf herbicides and chewing insecticides portfolios, as well as certain parts of its crop protection R&D pipeline and organization to FMC; divesting Dow’s PRIMACOR ethylene acrylic acid copolymers and ionomers business; and divesting a select portion of Dow AgroSciences’ corn seed business in Brazil. The company also closed its acquisition of FMC’s Health and Nutrition business.

“The trajectory of global economic expansion has gained momentum – driven by robust fundamentals in consumer and business confidence, employment and wage growth, and manufacturing and infrastructure investment activity,” says Andrew Liveris, executive chairman of DowDuPont. “In developed economies in particular, such as the United States, Germany, France, Canada, and the U.K., we continue to see strong leading indicators of broad-based growth.

“Furthermore, early signs from the business community point to U.S. tax reform as a catalyst for further domestic capital investments, which will take advantage of enhanced competitiveness and pro-business incentives. Adding to this, the emerging middle class in developing economies, most notably in India and China, but also in Africa and the Middle East, continues to support sustainable growth.

“All of this bodes well for the products and technologies within DowDuPont’s portfolio, which are well positioned to meet growing needs in the Materials Science, Agriculture, and Specialty Product sectors. Looking ahead, our levers of value creation are clear: continuing to further unlock the cost and growth synergies of this merger transaction, capitalizing on our early success and achieving the enhanced cost synergy commitment we are announcing today; delivering new products from our in-flight growth investments and powerful innovation pipeline; and quickly standing and separating into three industry-leading companies on the new accelerated timeline we announced today.” 

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