Reuters — U.S. chemicals producer DowDuPont reported a 14 per cent rise in net sales for the fourth quarter and beat Wall Street profit estimates as a strong global economy led to robust demand and higher prices for its products.
The newly-combined company, formed by the merger of chemical giants Dow Chemical and DuPont four months ago, said its net sales came in at $20.1 billion versus comparable net sales – which the company terms “proforma” sales – of $17.7 billion a year earlier (all figures US$).
It also said it planned to move ahead with plans to split the new company into three separate parts, starting with the Materials Science unit by the end of the first quarter of 2019. Agriculture and Specialty Products are expected to follow by June 1, 2019.
The chemicals giant saw prices rise by about five per cent across markets in the fourth quarter, while volumes — a proxy for demand — rose six per cent.
“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,” executive chairman Andrew Liveris said in the results statement.
“Furthermore, early signs from the business community point to U.S. tax reform as a catalyst for further domestic capital investments.”
Currently trading at a market value of about $176.9 billion, Dow and DuPont completed the $130 billion mega-merger in September. That created the world’s largest chemical maker, until the company goes through with a plan to split into three companies.
DowDuPont’s merger was welcomed by investors as a way to streamline the companies’ sprawling operations by combining overlapping businesses.
The company said on Thursday it was now planning to save $3.3 billion in costs on the back of the merger — slightly more than the $3 billion it expected to save earlier.
For the reported quarter DowDuPont saw a $1.1 billion benefit from lower U.S corporate taxes, but still posted a net loss of $1.2 billion from continuing operations — substantially the result of merger-related costs.
Adjusted for those and other one time effects, the company said it earned 83 cents on a share. Ahead of the numbers Wall Street was expecting it to make 67 cents a share, according to Thomson Reuters I/B/E/S numbers.
Shares of the company dipped to $75 in premarket trading on Thursday compared to the previous close of $75.58.
— Reporting for Reuters by Nivedita Bhattacharjee.