Chemical giant DuPont (DD) has divulged its growth strategies for its seed business. At the Eighteenth Annual Goldman Sachs Agribusiness Conference, Paul E. Schickler – president of DuPont Pioneer – highlighted opportunities in major global agricultural markets and the roll out of the Encirca services platform for farmers in the U.S.
Schickler, at the meet, emphasized the need for science-based, sustainable solutions for U.S. growers as an expected rise in population, urbanization and a fast emerging middle-class will require increased productivity.
Schickler added that, over the next five years, around half of the company’s growth in the Agriculture segment is expected to come from outside of North America, mostly in major markets such as Latin America, Eastern Europe, India and China where DuPont has a strong foothold and looking for continued growth.
DuPont Pioneer, the seed business of DuPont, plays a major role in the company’s focus on expanding its leadership in the science-driven segments of the agriculture-to-food value chains. It has been a leader in developing innovative decision services over the past ten years. DuPont Pioneer, over the past decade, has mapped over 20 million grower acres and helped customers implement variable rate seeding prescriptions on more than 1.5 million acres during the 2013 growing season.
The recent launch of the Encirca services platform, which represents a key part of DuPont Pioneers’ growth strategy, marks an expansion to DuPont’s whole-farm decision services offerings geared to help farmers boost their productivity and profitability. The company retains a differentiated approach to its whole-farm decision services as it offers farmers tailor-made services and personalized advice.
Encirca services will assist farmers in making planting decisions as well as more informed management decisions regarding nitrogen/fertility, irrigation and grain marketing throughout the year. These services have been developed through internal investment, strategic acquisitions and collaborations with leading innovators in agriculture.
Encirca services have been projected to deliver peak revenues of more than $500 million annually for DuPont Pioneer over the next decade. The company expects to launch additional services under the Encirca services moniker in 2015 and beyond. DuPont sees significant potential for these services in helping corn and soybean farmers in North America beef up productivity and further extend to a vast spectrum of crops and markets globally.
DuPont is witnessing strong momentum in its agriculture business, reflected by higher corn seeds and crop protection sales. Despite unfavorable currency impact, the Agriculture segment saw double-digit rise in sales in the fourth quarter of 2013 boosted by healthy insecticide sales in Latin America and earlier seed shipments, aided by the company’s acquisition of a majority stake in Pannar Seed (Pty) Limited.
DuPont is seeing healthy demand for its corn hybrids and expects continued strong growth in crop protection driven by new products. The company has numerous new products in its pipeline that are expected to create value for its customers.
DuPont launched 1,753 new products in 2013 and its key products including Optimum AQUAmax corn products and Optimum AcreMax insect control products are gaining significant market traction. The company gained more than a point in the North American corn market share last year driven by strong performance in its Pioneer seed business.
DuPont is a Zacks Rank #3 (Hold) stock.
Other companies in the chemical industry with a favorable Zacks Rank are The Dow Chemical Company (DOW), LyondellBasell Industries NV (LYB) and PPG Industries Inc. (PPG), all with a Zacks Rank #2 (Buy).
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