DowDuPont Inc. is going gangbusters with sales.
The company beat estimates on sales and earnings expectations after releasing earnings results on Thursday before the market open. The Action Alerts PLUS holding showed double-digit growth in all divisions, including agriculture that bounced back from a rough start this spring.
The agricultural chemical and packaging giant's net sales grew to $24.2 billion from $20.7 billion last year. Earnings per share of $1.37 beat the Wall Street consensus of $1.30 according to FactSet.
""Leading indicators, such as manufacturing output, employment, wages and consumer spending remain largely constructive, supporting increased global economic activity," Howard Ungerleider, CFO of the company, in a statement on Thursday. "These are key indicators for me that our business focus and our people are making a difference in the marketplace for our customers and for shareholders."
Agricultural division sales were $5.73 billion, a 25% gain year over year against $4.6 billion in 2017 second quarter sales. In addition to strong deliveries after weather-related delays, the company also experienced strong local pricing gains across the business, according to release.
DowDuPont stock was down about 2.5% in afternoon trading to $66.25 at 2:18 p.m.
While the company noted broad-based local price gains and growth in volume, there are were three standouts.
Strong Agriculture Bounce
Agricultural division sales were $5.73 billion, a 25% gain year over year against $4.6 billion in 2017 second quarter sales. In addition to strong deliveries, the company also experienced strong local pricing gains across the entire business.
Seed sales were $3.9 billion, up 35 % driven by sales in the Northern Hemisphere. Sale of pesticides and herbicides in the Crop Protection category grew 7%, according to the earnings report.
Insecticide sales grew 20% in the quarter, driven by "strong demand-creation efforts" against competitive chemistries for Spinosyn™ products, and new product launches including Arylex, a cereal fungicide that was popular in China.
Materials Sciences Boost
The company's materials sciences division reported an 18% jump in sales to $12.6 billion "in all segments and all regions", DowDuPont said.
Materials Industrial Intermediates & Infrastructure's sales were even more pronounced with 29%. BMO Capital Markets highlighted DowDuPont among the standouts this quarter, citing EBITDA margins rising 380bp to 17.6% on the "strength of polyurethanes, the Sadara ramp and robust VCM and MDI demand."
Specialty Products Momentum
Specialty products' sales rose 10% in the second quarter to $5.9 billion, with its volume growing 4%.
This division posted operating EBITDA growth of 23% to $1.6 billion.
Specialty products include results for the company's Electronics & Imaging, Nutrition & Biosciences, Transportation & Advanced Polymers, and Safety & Construction segments, categories that had $21 billion in pro forma sales in 2017.
Still these three strong areas of growth for DowDupont are not without its risks.
"Our new product launches are resonating with customers, resulting in strong demand across each of our targeted end-markets," said CEO Ed Breen.
CFO Howard Ungerleider cited "some discrete headwinds, most notably currency fluctuations, particularly in agriculture, and higher raw materials costs in all three divisions."
Other business lines fell below expectations, including Performance Mats and Safety and Construction EBITDA fell below analyst estimates.
Also, EBITDA guidance for the third quarter of up more than 12% compared to a year ago is below consensus estimate of 21%, Vincent Andrews of Morgan Stanley said in a note on Thursday.
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Action Alerts PLUS, which Jim Cramer manages as a charitable trust, is long DWDP.