12:19 PM, Nov 2, 2017 — DowDuPont, (DWDP) the company formed in August after the merger of Dow Chemical and DuPont, reported higher-than-expected earnings in its debt quarterly release on Thursday, as the firm outlined plans for job cuts and other actions in a $3 billion cost savings push.
Pro forma adjusted earnings rose to $0.55 a share from $0.50 a year earlier. The consensus on Capital IQ was for $0.45. Net sales climbed 8% to $18.3 billion on a pro forma basis, and were up 23% to $15.4 billion on a GAAP basis. The Street was expecting $18.2 billion.
“The company had to contend with a mega-merger, numerous natural disasters, several large-scale productivity initiatives, establishing architecture for three new companies and executing substantial portfolio actions,” said Kevin McCarthy, chemicals analyst at Vertical Research Partners. “Notwithstanding these challenges, DowDuPont managed to deliver encouraging results in the company’s first quarter out of the gate.”
When DowDuPont completed the merger, it split the company into three businesses comprising agriculture, materials sciences and specialty products. On Thursday DowDuPont said it’s taking actions to generate $3 billion in cost savings to “integrate the organization post-merger and create strong foundations for the three intended companies.”
The savings will come from global job cuts, procurement synergies, consolidation of buildings and facilities and select asset shutdowns, the company said. DowDuPont said it expects to recognize total pre-tax charges of about $2 billion, with $1 billion in the fourth quarter. The program is seen achieving a 70% run rate at the end of 12 months and 100% within 24 months.
“You should expect us to remain focused on executing on our $3 billion cost synergy commitment and advancing preparations to create three focused growth companies in agriculture, materials science, and specialty products,” said Chief Executive Ed Breen.
Companies: DowDuPont Inc.
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