[ad_1]
DowDuPont, the chemical group formed as part of a $ 130 billion merger last year, announced a $ 4.6 billion write-down and warned it had been forced to cut its long-term forecasts of revenue and profitability in its agricultural division. as a distinct society next year.
In regulatory filings after market close on Thursday, the company announced plans to write off about $ 4.5 billion of goodwill and $ 100 million of other assets from its balance sheet, reflecting a recognition of the fact that she was too optimistic about future prospects. The merger of Dow Chemical with DuPont was completed last August.
He partly questioned the pressure on farmers' incomes from falling commodity prices and high grain stocks, which he said would result in "lower technology and less pressure on price".
The division includes a seed company, which provides crops including corn and soybeans, and a crop protection company manufacturing chemicals, including herbicides and insecticides.
Shares of DowDuPont, which lost 1.7% during the trading day on Thursday, still lost 2.1%, to $ 57.33 after normal hours.
Laurence Alexander, an analyst at Jefferies who has a "buy" rating on the company's shares, described the write-down in a note as "essentially, if not entirely, an assessment of the known conditions in the seed markets. and crop protection chemicals ".
DowDuPont stated that goodwill on its balance sheet was constituted by the accounting treatment of the transaction that created the company, which means that its operating units "have become more likely to be impaired for any decline. fair value since the merger ".
The cash flow forecast in the third quarter of this year's strategic reviews concluded that "the events and circumstances that developed in 2018" would mean that long-term revenues and profits would be lower than what it would be. we believed at the time of the merger. said the company.
In particular, it cited declining sales and margin growth in North America and Latin America, due to reduced plantings, the expected unfavorable shift from soybean to Latin American, delays in product registration and the adverse effects of currency conversion. Real Brazilian, as well as the pressure on farm income.
DowDuPont described these circumstances as a "trigger event" that required it to perform an impairment analysis of goodwill and intangible assets of the Agriculture Division.
Later in the evening of Thursday, about three hours after its initial filing, the company issued another statement "in response to a market activity", pointing out that the depreciation was non-financial and "reflected the effect of the conditions. previously declared ". He added that the write-down would not affect the previously announced financial forecast for its agriculture division for 2018.
DowDuPont had previously stated that it expects its agricultural division to publish stable net sales and a% increase in operating income before interest, taxes, depreciation and amortization for the coming years.
Corteva Agriscience, as the company will be named when it will be split as a separate company, will hold a day of investor exposing in detail its perspective on the outlook, Nov. 8. The split is scheduled for June 1, 2019.
Source link
