E. I. du Pont de Nemours (aka DuPont) puts chemicals to work. A top US chemical maker (along with Dow and ExxonMobil Chemicals), the company consists of 7 businesses across six segments, each of which serves a diverse set of markets. Using its expertise in science-based development, it offers products, materials, and services that are applied in everything from agriculture, apparel, and construction, to electronics, nutrition, and safety. DuPont operates worldwide with most of its sales coming from outside of the US. In 2015 DuPont agreed to merge with Dow to create a group valued at $130 billion, but the complexity of the deal means as of mid-2017 it is yet to close.
Change in Company Type
In July 2016, DuPont and Dow shareholders agreed to complete the merger of equals transaction. Following the consummation of the merger, the combined company will pursue the separation of the combined company's Agriculture, Material Science, and Specialty Products businesses into three independent, publicly traded companies.
The company consists of 7 businesses and six reportable segments: Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Materials, and Protection Solutions. DuPont also has businesses not included in the reportable segments, such as pre-commercial programs, consulting solutions, nonaligned businesses, and pharmaceuticals in Other.
The company's largest segment, Agriculture (40% of sales), consists of the Pioneer Hi-Bred International and DuPont Crop Protection businesses, offering a slew of products and services aimed at improving crop yields and productivity. Products include Pioneer brand seeds, as well as other insecticide, fungicide, and herbicide brands.
DuPont Performance Materials (Performance Materials, 20%) includes DuPont Performance Polymers (Performance Polymers) and DuPont Packaging & Industrial Polymers (Packaging & Industrial Polymers) and provides its customers with innovative polymer science solutions and expert application development assistance.
Protection Solutions businesses (more than 10%), include DuPont Protection Technologies (Protection Technologies) and DuPont Building Innovations (Building Innovations).
Nutrition & Health (15%) offers a wide range of sustainable, bio-based ingredients, specialty food ingredients, food nutrition, health and safety products.
Electronics & Communications (10%) is a supplier of differentiated materials and systems for photovoltaics, consumer electronics, displays and advanced printing.
Industrial Biosciences (5%) develops and manufactures a broad portfolio of bio-based products and clean technologies. The segment's enzymes add value and functionality to processes and products across a broad range of markets such as animal nutrition, detergents, food manufacturing, ethanol production and industrial applications.
DuPont has 305 facilities for its varied operations in more than 90 countries worldwide. The majority are located in Europe, while other operations can be found in North America, Latin America, the Middle East, Africa, and Asia/Pacific. The US and Canada accounts for more than 40% of the company's revenue.
Sales and Marketing
The company serves companies in a range of industries, including Agriculture, Automotive, Building and Construction, Chemicals, Electronics, Energy, Food and Beverage, Government and Public Sector, Health Care and Medical, Marine, Mining, Packaging and Printing, Plastics, and Safety and Protection.
Pioneer Hi-Bred markets and sells seed products under the Pioneer brand and additional brand names. In the corn and soybean markets of the US Corn Belt, Pioneer brand products are sold through a specialized force of independent sales representatives. Outside of North America, Pioneer's products are marketed through a network of subsidiaries, joint ventures, and independent producer-distributors.
DuPont Crop Protection products are marketed and sold to growers and other end users through a network of wholesale distributors and crop input retailers. Sales for the business' insect control portfolio is led by DuPontTM Rynaxypyr insecticide, a product that is used across a broad range of core agricultural crops.
Nutrition & Health products are marketed and sold under a variety of brand names.
In fiscal 2016, DuPont recorded a fourth consecutive year of lower sales. Sales fell 2% to $24.6 billion due to lower electronics and communications and polymer prices. Unfavorable currency rates, particularly the peso, euro, and yuan, also weighed on sales. Sales to developing markets, notably the Asia-Pacific region, were up 2%.
Net income climbed 33% to $2.5 billion as the company restructured and cut costs amid declining revenue. DuPont achieved a number of cost savings, including lower redundancy payments, lower R&D expenses, and lower pension costs.
Cash provided by operating activities jumped 42% to $3.3 billion due to higher net income, lower year-on-year tax payments, and lower working capital.
DuPont's general strategy for growth is to use its expertise in science and technology to launch products that address global needs for food and cleaner energy (mainly to reduce dependence on fossil fuels).
The company is looking to build and leverage leading positions in three highly attractive strategic focus areas -- Agriculture & Nutrition, BIO-Based Industrials, and Advanced Materials -- where the company has robust opportunities and strong, well established competitive advantages.
DuPont's near-term focus is to deliver earnings growth via cost savings while positioning the businesses to compete successfully over the long term, and also complete the proposed merger of equals with Dow.
The company's stated aim was to cut operating expenses by $1 billion by the end of 2016, and in fiscal 2016 cost savings added some $550 billion to the bottom line.
As part of its portfolio reorganization, in 2015 DuPont spun off its Performance Chemicals unit as the Chemours Company.
Mergers and Acquisitions
In order to gain approval for the Dow Chemical deal from European regulators, DuPont traded businesses with FMC. DuPont sold part of its crop protection business to FMC and FMC sold its health and nutrition business to DuPont. DuPont gained about $1.6 billion on the deal due to differences in the valuations of the assets. FMC's Health & Nutrition business generated more than $700 million in revenue in 2016 from food ingredients and pharmaceuticals. DuPont expects that the additional products will complement its nutrition and health business.