“This was another strong quarter for our Nutrition & Health segment,” said VP of investor relations, Greg Friedman, in a conference call on the Q3 results for the chemicals giant.
“Sales were up 4%, led by volume growth in specialty proteins, probiotics, and cultures, and continued momentum in enablers. We continued to expand in emerging markets, growing segment sales 10% in the quarter.”
“Operating earnings were up 23% to $100m (€78.5m) from the higher sales and operating margin improvement, due to mix enrichment, productivity actions, and lower raw material costs. This was the fifth consecutive quarter of year-over-year operating margin improvement.”
For the whole DuPont business that includes Advanced Materials and Industrial Biosciences, Q3 sales dropped from $7.8bn (€6.12bn) to $7.5bn (€5.89bn) but margins improved in five of the firm’s seven divisions and so profits rose compared to Q3 2013 from $285m (€223.65m) to $433m (€339.82m).
Chair and CEO Ellen Kullman told investors of overall, "sluggish economic growth" but pointed to profit margin gains across the company that were in line with the company’s broad strategic plan to deliver higher growth and shareholder value.
“In Agriculture and Nutrition, we are extending our leadership position across the high-value science driven segments of the agriculture to food value chains,” Kullman said, noting the wider company had streamlined 23 businesses into 12 and cut its upper management staff by 20%.
Trian, costs, R&D
She said the company was in discussions with major shareholder Trian about a proposal to split the company along industrial and life sciences/agriculture/nutrition lines to reduce overall costs. “DuPont’s conglomerate structure is destroying value,” Trian has said.
Kullman said the margin improvement demonstrated the company was already tackling the issue via various initiatives.
Other notable activity included DuPont increasing its share of the US corn market by 7% between 2008 and 2013 even though, “It’s a very competitive market. Corn acres are down. There’s a lot of activity going on,” said Kullman.
She said that while R&D spending across the company was down 5%, it remained a science-led company, and noted some R&D was conducted by outside vendors to whom payment did not always accrue in the same financial period.
The company was also better leveraging its existing R&D resources. “I think most importantly, our strategy around research has not changed.”