The strong U.S. dollar and declines in planted acreage sent Dow AgroSciences LLC’s first-quarter sales and profits down sharply.
The Indianapolis-based maker of genetically modified seed traits and weed killers said Thursday that it earned $409 million before interest, taxes, depreciation and amortization, down by 19 percent from the same quarter a year ago.
Sales fell 12 percent, to $1.9 billion.
Crop-protection sales slipped 11 percent due to the negative currency impact and a later start to the European growing season.
Seed sales decreased 14 percent because higher crop yields and inventories in North and Latin America have pushed down crop commodity prices, prompting farmers to plant fewer acres this year.
Dow AgroSciences is a subsidiary of Michigan-based Dow Chemical Co. The parent company's first-quarter earnings beat analysts’ estimates as lower raw-material costs widened plastics margins, according to Bloomberg News.
Net income rose to $1.18 a share from 79 cents a year earlier. Profit excluding some items was 84 cents, exceeding the 76-cent average of 19 estimates compiled by Bloomberg. Sales declined to $12.4 billion from $14.5 billion, missing the $13 billion average estimate.
Dow Chemical CEO Andrew Liveris agreed last month to sell Dow’s chlorine business, on which the company was founded 118 years ago, for about $5 billion to focus on more profitable units such as plastics packaging. Profit margins were the widest in a decade, led by a 5.6-percent gain in plastics, Dow’s largest unit, as costs tumbled for oil and natural gas liquids such as propane.
“Margins from propane are up significantly, which completely plays into Dow’s wheelhouse,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said.
Dow shares rose 2.3 percent, to $51.15 each, in premarket trading. The shares had gained 9.7 percent this year through Wednesday.