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DowDuPont (DWDP) Lags Earnings & Revenue Estimates in Q4

Anindya Barman

DowDuPont Inc. DWDP recorded earnings (on a reported basis) from continuing operations of 21 cents per share for fourth-quarter 2018 compared with a loss of 52 cents per share it logged in the comparable quarter a year ago.

Barring one-time items, earnings came in at 88 cents per share for the fourth quarter, up 6% from 83 cents a year ago. However, it missed the Zacks Consensus Estimate of 89 cents.

DowDuPont raked in net sales of $20,099 million for the quarter, flat year over year. It also missed the Zacks Consensus Estimate of $21,105 million. The company witnessed higher sales volumes and prices, offset by unfavorable currency impact. Currency reduced sales 2% in the quarter.

Volumes rose 1% in the quarter with gains witnessed in Asia Pacific and Latin America. The company also saw a 1% rise in local prices on gains across most regions.

FY18 Results

For 2018, net earnings from continuing operations were $1.65 per share, up from 95 cents per share recorded in 2017.

Net sales for the year jumped around 38% year over year to roughly $85,977 million.

Segment Highlights

Materials Science: Revenues from the division went down 1% year over year to $11.8 billion in the quarter as lower pricing and unfavorable currency more than offset volume growth.

Specialty Products: Revenues from the division rose 2% to $5.5 billion with gains witnessed in most segments. Volume were flat while local price increased 2%.

Agriculture: Net sales from the division rose 1% to $2.8 billion in the reported quarter on the back of sales of new crop protection products. Volumes rose 4% while pricing improved 5%.
 
Financials
 
DowDuPont had cash and cash equivalents of roughly $13.5 billion at the end of 2018. Long-term debt was roughly $37.7 billion.

Cash flow from operations in the fourth quarter was $5.1 billion compared with $1.8 billion a year ago.

DowDuPont returned $2.3 billion to shareholders in the reported quarter through dividends and share repurchases.

Outlook

DowDuPont envisions global economic expansion to continue this year at a modestly slower pace on a year-over-year comparison basis. The company said that it will remain focused on actions including capturing cost synergy savings, capitalizing on its growth investments and delivering productivity.

DowDuPont achieved cost synergy savings of more than $500 million in the fourth quarter and $1.6 billion for full-year 2018, exceeding its target of $1.5 billion for the year.

The company’s Materials Science division remains on track for separation as Dow Holdings Inc. on Apr 1, 2019, followed by the spinoff of the Agriculture division as Corteva, Inc. on Jun 1, 2019.

Price Performance

DowDuPont’s shares have lost around 19.3% over a year, outperforming the roughly 21.1% decline recorded by the industry.  



 

Zacks Rank and Stocks to Consider

DowDuPont currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering in the basic materials space include Ingevity Corporation NGVT, Quaker Chemical Corporation KWR and Israel Chemicals Ltd. ICL.

Ingevity has an expected earnings growth rate of 21.5% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have gained 28% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quaker Chemical has an expected earnings growth rate of 21.1% for the current year and carries a Zacks Rank #2 (Buy). Its shares have gained 30% in the past year.

Israel Chemicals has an expected earnings growth rate of 5.4% for the current year and carries a Zacks Rank #2. The company’s shares have rallied 39% over the past year.

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