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Five consecutive years of exceptional harvests in North and South America have inflated storage bins and lowered crop prices, forcing farmers to cut costs.
Photo:
Daniel Acker / Bloomberg News
DowDuPont
Inc.
DWDP -1.66%
Agriculture Unit Receives $ 4.6 Billion Charge in Third Quarter After Business Lowers Long-Term Sales and Profit Expectations, Highlighting Challenges Facing Agri-Food in the Americas.
DowDuPont said Thursday in the securities filing that it had recalculated the fair value of the goodwill and other intangible assets in the books of the merged company, Dow and DuPont, and had determined that the value of the assets of his farming unit had decreased. The company said the forecast decline in cash flows for the sector, due to lower sales and profits in the Americas, as well as currency issues in Brazil, caused depreciation.
The company announced that it would remove about $ 4.5 billion in acquisition gap and $ 100 million of unspecified assets associated with its farming unit. DowDuPont stated that the parent's financial expenses for the quarter ended September 30 would not be affected by the impairment charge.
But DowDuPont shares fell 4.1% after trading hours on Thursday. The company is expected to release its third quarter results on November 1st.
The DowDuPont charge reflects the many challenges faced by seed and pesticide manufacturers. Five consecutive years of exceptional harvests in North and South America have inflated storage bins and lowered crop prices, forcing farmers to cut costs. DowDuPont said in August that its agricultural sales volume was down 5% from the first half of 2018, in part because farmers had planted fewer acres.
The priority given by farmers in North America and South America to soybeans relative to maize this year has also reduced the profits of seed companies. Companies such as DowDuPont and Bayer AG generally generate greater profits on corn seeds, which yields a larger crop per acre for farmers and often includes more genes to control pests and diseases. herbicides.
Late spring planting delayed seed sales in North America for DowDuPont, the world's second largest seed and pesticide seller after Bayer.
DowDuPont has filed separate documents outlining the strategy and activities of Corteva Agriscience, the seed and pesticide manufacturer that will be separate from DowDuPont. In September, the company appointed James Collins, DowDuPont 's current head of farming, as Corteva' s CEO, and expects the benefits to be completed by June 1, 2019.
Write to Micah Maidenberg at [email protected] and Jacob Bunge at [email protected]
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