DowDuPont Lowers Q1 Outlook Due To Flood Impact, Margin Compression

(RTTNews) - DowDuPont Inc. (DWDP) lowered its financial outlook for the first quarter of fiscal 2019, citing the impact of the recent flooding in the Midwestern region of the U.S. and greater-than-expected margin compression in its Packaging & Specialty Plastics division.

DowDuPont now expects its net sales for the first quarter to be down high-single digits percent, compared to its previous guidance of down mid-single digits percent.

The company now expects its operating EBITDA for the first quarter to be down high-teens percent, compared to its previous guidance of down low-teens percent, both versus the same quarter last year.

DowDuPont cited near-term trends and discrete headwinds in some of its key value chains in the Agriculture and Materials Science divisions for the revised outlook.

According to DowDuPont, flooding during the month of March in the Midwestern region of the U.S. resulted in transportation disruptions and significant road closures that halted farming operations, limited the ability to deliver products to customers, and delayed pre-season applications.

As a result, DowDuPont's Agriculture Division net sales for the first quarter are expected to be down 4 percent to 6 percent and operating EBITDA is expected to be down $125 million to $150 million, as compared to the same quarter last year.

In the Materials Science division, DowDuPont expects net sales to be down low-teens percent, compared to the previous guidance of down high-single digits percent. Operating EBITDA is expected to be down mid-20s percent compared to the previous guidance of down low-20s percent.

The company noted that the midpoint of the Division's updated guidance resulted in approximately $100 million lower operating EBITDA versus previous guidance, driven primarily by greater-than-expected margin compression globally in Packaging & Specialty Plastics.

Meanwhile, the company expects first-quarter net sales and operating EBITDA in the Specialty Products division to be in line with its previous guidance.

DowDuPont will release its financial results for the first quarter of 2019 on May 2.

Earlier this week, S&P Dow Jones Indices said that Dow Inc. (DOW) will replace DowDuPont in the Dow Jones Industrial Average or DJIA, effective prior to the open of trading on Tuesday, April 2, 2019. The change follows DowDuPont's announcement that it is splitting into three companies, with Dow Inc. being spun-off effective April 2.