DowDuPont sales grow in 2017 even as profit declines

Materials giant DowDuPont Inc. saw its combined sales increase in 2017, even as the firm's profit slipped.

DowDuPont, based in Midland, Mich., and Wilmington, Del., posted total sales of just over $79.5 billion in 2017, up more than 12 percent vs. the prior year. Profit, however, tumbled 48 percent to just under $2.8 billion.

The firm's Packaging & Specialty Plastics unit — including its massive polyethylene resin business — saw sales grow almost 13 percent to almost $22.4 billion in 2017. Pretax operating profit for that unit, however, slid more than 8 percent to just under $4.7 billion.

DowDuPont's Transportation & Advanced Polymers unit, including nylon and most of DuPont Co.'s previous performance polymers business, had 2017 sales of just over $5.1 billion, up 14 percent vs. 2016. The unit's pretax operating profit jumped 26 percent to more than $1.3 billion.

Packaging & Specialty Plastics was the largest of DowDuPont's seven operating units in 2017, generating 28 percent of total sales. Transportation & Advanced Polymers ranked sixth with a share of about 6.5 percent.

Geographically, the U.S. and Canada was DowDuPont's largest sales area in 2017, bringing in almost 39 percent of sales, followed by the Europe, Middle East and Africa region at almost 28 percent.

DowDuPont was created Aug. 31 from the merger of plastics and chemicals leader Dow Chemical Co. and DuPont Co. In a Feb. 1 news release, CEO Ed Breen said that DowDuPont's 2017 results "reflect robust underlying demand for many of our products, the power of our innovation engine and our leading positions in growing markets."

"We delivered these results while completing our merger, realigning the business around key end markets, and achieving more than $800 million in run-rate savings from our cost synergy programs," he added.

Based on this progress, Breen said DowDuPont is accelerating its planned spinoff of the firm into three separate public companies, including one focused on materials. DowDuPont now expects the spinoff to take place in the next 14 to 16 months, which would place the event in mid-2019. Officials also now expect cost synergies from the merger to be $3.3 billion, instead of $3 billion as first expected.

They added in the release that Packaging & Specialty Plastics saw fourth-quarter growth from new capacity additions, including more PE, on the U.S. Gulf Coast and in Saudi Arabia. Volume growth in North America was driven by robust demand in food and specialty packaging, as well as in health and hygiene applications, officials said.

On Wall Street, investors were wary of DowDuPont's lower-than-expected growth forecast for 2018. As a result, the firm's per-share stock price slid from $75.50 on Jan. 31 to around $72 in early trading Feb. 2, a drop of almost 5 percent amid a broader market selloff. The firm's share price had been under $65 as recently as early September, shortly after the merger became official.