Sales at Dow AgroSciences continued to slide last quarter as parent Dow Chemical Co. prepared to close a merger with DuPont to form the world’s largest agricultural company.
Indianapolis-based agricultural Dow Agro on Thursday said revenue in the first quarter was $1.6 billion, down 16 percent from a year ago, as the company was hurt by high inventories, currency headwinds and lower prices.
Operating earnings for the agriculture operations were $403 million, a tick down from $409 million a year ago.
Dow Chemical officials said low prices will continue to hurt sales to farmers this year, a warning also recently issued by other agricultural companies. Last month, Monsanto reduced its full-year forecast and said it would trim 16 percent of its workforce. DuPont said last month that the agricultural sector remains “challenged.”
Dow agreed in December to merge with DuPont and form the world’s largest agriculture business, with combined ag sales of about $18 billion. The two companies said in December they would squeeze out $1.3 billion in cost savings from merging the ag units, but they have not estimated how many layoffs will occur.
Last month, they said that Wilmington, Delaware, will be the headquarters for their combined agricultural business, but that Indianapolis will be one of its two “global business centers.”
It wasn’t clear how that designation would affect employment at Dow Agro, which employs 1,500, many of them highly paid executives and researchers.
However, the Indiana Economic Development Corp. said in a written statement that “with the establishment of this global business center, long-term revenue and commensurate employment are expected to grow in Indianapolis.”
Dow and DuPont said Wilmington will be home base for the CEO and “key corporate support functions” while Indianapolis and the other global business center—Johnston, Iowa—will be home to the leaders of business lines, R&D, the global supply chain, sales and marketing.
Dow Chemical reported Thursday morning that its first-quarter profit slid mostly due a hefty charge tied to legal settlements, but the specialty chemicals maker's adjusted results topped analyst estimates.
For the three months ended March 31, Dow Chemical Co. said that earnings available for common shareholders were $169 million, or 15 cents per share. A year earlier the Midland, Michigan-based company earned $1.39 billion, or $1.18 per share.
The current quarter included a charge of 70 cents per share for legal settlements and a 4 cents-per-share charge for costs related to portfolio and productivity actions.
Stripping out these items, earnings were 89 cents per share.
The results surpassed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 83 cents per share.
Revenue declined to $10.7 billion from $12.37 billion, but still beat the $10.48 billion that analysts surveyed by Zacks forecast.