DuPont(DD) - Get Report posted better-than-expected fourth-quarter earnings Tuesday but cautioned that its merger with Dow Chemical (DOW) - Get Report would hit earnings in the first three months of the year.
DuPont said adjusted profit for the three months ended in December were 51 cents a share, compared to a loss of 26 cents a year earlier and well ahead of the Wall Street forecast of 41 cents. Revenue for the three-month period, however, slowed 2% to $5.2 billion owing to local price declines and lower volumes. Full-year sales, the company said, were also down 2% to $24.6 billion.
The company said it expects first-quarter sales this year to be largely flat from the same period a year ago, and cautioned that the agriculture sector remains "challenged."
"2016 was an important year for DuPont as we exceeded our expectations for earnings, cost savings, operating margin expansion and free cash flow improvement," DuPont Chairman and CEO Ed Breen said in a statement. "We made excellent progress on our strategic priorities in 2016 to increase shareholder value, and we will build on this groundwork as we move into 2017."
"We look forward to closing the merger with Dow and are continuing to have constructive discussions with regulators in key jurisdictions. We now expect the merger to close in the first half of 2017, pending regulatory approval," Breen said.
DuPont said the company's first-quarter earnings would include a charge of 15 cents a share for "transaction costs associated with the planned merger with Dow ... prior year GAAP earnings included a net benefit of 18 cents per share from significant items, primarily due to a gain on the sale of an entity."
Europe's competition commissioner, Margarethe Vestager, told Bloomberg Markets: Americas television earlier this month that the agrochemical space is a "very concentrated sector already and what we're looking at is the very obvious, that farmers still need to have choice."
"Choice of seeds, choice of products that can help them to fight worms or fungus or whatever might be challenging their crops. So these are the things we are looking at and the outcome of the merger is of course still very open," she added.