01.31.19
DowDuPont announced its fourth quarter and full year 2018 financial highlights.
“In our first full year as a merged company, we delivered consistently strong results. Pro forma sales rose eight percent with gains in every geography. We delivered a 13 percent increase in operating EBITDA. And we raised our cost synergy expectation by 20 percent to $3.6 billion, while continuing to return significant capital to shareholders,” said Ed Breen, CEO of DowDuPont.
“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.”
Fourth Quarter Financial Highlights
Materials Science
“In our first full year as a merged company, we delivered consistently strong results. Pro forma sales rose eight percent with gains in every geography. We delivered a 13 percent increase in operating EBITDA. And we raised our cost synergy expectation by 20 percent to $3.6 billion, while continuing to return significant capital to shareholders,” said Ed Breen, CEO of DowDuPont.
“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.”
Fourth Quarter Financial Highlights
- GAAP earnings per share from continuing operations totaled $0.21. Adjusted earnings per share increased 6 percent to $0.88, compared with the year-ago period of $0.83. Adjusted earnings per share exclude significant items in the quarter totaling net charges of $0.56 per share and a $0.11 per share charge for DuPont amortization of intangible assets;
- Net sales were even with the year-ago period at $20.1 billion, as price and volume gains were offset by currency;
- Volume grew one percent from the year-ago period. Gains were achieved in Asia Pacific, up 8 percent and Latin America, up nine percent, which more than offset volume declines in U.S. & Canada, down three percent and EMEA, down one percent.
- Local price rose one percent, with gains in most regions. Currency decreased sales two percent;
- GAAP Net Income from Continuing Operations totaled $513 million. Operating EBITDA1 was $3.9 billion, flat with the year-ago period, as cost synergies and local price gains were offset by margin compression in the Materials Science Division, lower equity earnings and a headwind from currency;
- DowDuPont achieved cost synergy savings of more than $500 million in the quarter, and since merger close has now delivered more than $1.8 billion of cumulative savings;
- Cash flow from operations in the quarter was $5.1 billion compared to $1.8 billion in the year-ago period. After adjusting for the accounting and presentation change for accounts receivable securitization, cash flow from operations rose $0.9 billion year-over-year;
- The company returned $2.3 billion to shareholders in the quarter through dividends ($0.9 billion) and share repurchases ($1.4 billion). DowDuPont intends to complete its remaining open share repurchases in the first quarter of 2019. Since the merger closed, the company has returned nearly $10 billion to shareholders.
- GAAP earnings per share from continuing operations totaled $1.65. Adjusted earnings per share were $4.11, up 21 percent versus pro forma results in the year-ago period. Adjusted earnings per share exclude significant items totaling net charges of $2.02 per share, as well as a $0.44 per share charge for DuPont amortization of intangible assets;
- GAAP net sales increased by 38 percent. Net sales increased eight percent to $86.0 billion versus pro forma results in the year-ago period, with gains in all regions;
- Volume grew four percent on a pro forma basis, with gains in most regions, led by double-digit growth in Asia Pacific;
- Local price rose three percent on a pro forma basis, with gains in all regions. Currency increased sales one percent;
- GAAP Net Income from Continuing Operations totaled $4 billion. Operating EBITDA increased 13 percent to $18.3 billion versus pro forma results in the year-ago period, as cost synergies; local price gains; volume growth, including the benefit of new capacity additions; lower pension/OPEB costs; and higher equity earnings more than offset higher raw material costs;
- DowDuPont achieved year-over-year cost synergy savings of $1.6 billion, surpassing its increased target of $1.5 billion;
- Cash flow from operations totaled $4.7 billion and included discretionary pension contributions of approximately $2.2 billion. Excluding these discretionary contributions, cash flow from operations would have been $6.9 billion.
Materials Science
Net sales decreased 1 percent to $11.8 billion, as volume growth of one percent was more than offset by local price and currency, each down one percent.
Operating EBITDA decreased 12 percent to $2.1 billion, driven by margin compression in isocyanates and polyethylene products and lower equity earnings.
Full-year sales increased 11 percent on a pro forma basis, with local price and volume gains in all regions. Operating EBITDA grew 10 percent on a pro forma basis, with gains in all segments, driven by local price and volume gains, including contributions from new capacity on the U.S. Gulf Coast; cost synergies; and higher equity earnings.
The division achieved successful startups of the final assets in its first wave of U.S. Gulf Coast investments, bringing online its new NORDEL EPDM, high melt index elastomers and low-density polyethylene trains, and completing the capacity expansion of a bi-modal gas phase polyethylene unit.
Performance Materials & Coatings
Performance Materials & Coatings reported net sales of $2.2 billion, down one percent from the year-ago period. Sales increases in most regions were more than offset by a decline in Asia Pacific. Local price increased seven percent, with gains in all regions. Volume declined six percent, with decreases in both businesses and all regions. Currency decreased sales two percent versus the year-ago period.
Consumer Solutions and Coatings & Performance Monomers both reported modest sales declines on lower volume and unfavorable impacts from currency, which more than offset price gains in all regions. Consumer Solutions continued to capture price gains, while volume declined primarily due to proactive measures to improve product and business mix. Coatings & Performance Monomers sales declined as price increases in most regions were more than offset by lower demand and a headwind from currency.
Operating EBITDA increased to $421 million, up five percent from $400 million in the year-ago period. The increase was primarily due to higher local pricing and cost synergy capture, which more than offset volume declines and a $20 million impact from an extended turnaround in Performance Monomers.
Operating EBITDA decreased 12 percent to $2.1 billion, driven by margin compression in isocyanates and polyethylene products and lower equity earnings.
Full-year sales increased 11 percent on a pro forma basis, with local price and volume gains in all regions. Operating EBITDA grew 10 percent on a pro forma basis, with gains in all segments, driven by local price and volume gains, including contributions from new capacity on the U.S. Gulf Coast; cost synergies; and higher equity earnings.
The division achieved successful startups of the final assets in its first wave of U.S. Gulf Coast investments, bringing online its new NORDEL EPDM, high melt index elastomers and low-density polyethylene trains, and completing the capacity expansion of a bi-modal gas phase polyethylene unit.
Performance Materials & Coatings
Performance Materials & Coatings reported net sales of $2.2 billion, down one percent from the year-ago period. Sales increases in most regions were more than offset by a decline in Asia Pacific. Local price increased seven percent, with gains in all regions. Volume declined six percent, with decreases in both businesses and all regions. Currency decreased sales two percent versus the year-ago period.
Consumer Solutions and Coatings & Performance Monomers both reported modest sales declines on lower volume and unfavorable impacts from currency, which more than offset price gains in all regions. Consumer Solutions continued to capture price gains, while volume declined primarily due to proactive measures to improve product and business mix. Coatings & Performance Monomers sales declined as price increases in most regions were more than offset by lower demand and a headwind from currency.
Operating EBITDA increased to $421 million, up five percent from $400 million in the year-ago period. The increase was primarily due to higher local pricing and cost synergy capture, which more than offset volume declines and a $20 million impact from an extended turnaround in Performance Monomers.
