DD DuPont de Nemours Inc

By Jacob Bunge 

DuPont Co. is scheduled to announce its fourth-quarter results before the market opens on Tuesday. Here's what to look for:

EARNINGS FORECAST: Analysts expect operating income of 25 cents a share for the third quarter, according to Thomson Reuters, compared with 71 cents a year earlier.

REVENUE FORECAST: Revenue of $5.5 billion is forecast for the quarter, versus $7.4 billion a year earlier.

WHAT TO WATCH:

DOWDUPONT'S FUTURE: Investors have had the holiday season to digest DuPont's plan to merge with rival Dow Chemical Co. and then split into three separate companies, but questions still remain--including whether Dow and DuPont may yet tweak the structure of the deal. Bernstein analysts say that shareholders of both companies like the deal's concept, but not the way it is set up, with "suboptimal" synergies and the likely delay of some hoped-for changes, like improving operations in some of Dow and DuPont's businesses. "We find it unlikely that [DuPont CEO Ed] Breen will have the time to focus on super-charging growth during the merger-split," according to Bernstein.

COMMODITY PRESSURE: Crop prices have climbed since the start of the year, led by corn, where futures have gained 2.9%. But few expect commodity prices to stage a major turnaround, as private forecasters peg slightly higher U.S. acreage planted this spring. J.P. Morgan analysts don't expect any material improvement in farmers' cash receipts until at least 2018, adding that "even a weather event equivalent to the drought in 2012 wouldn't be enough to counter today's oversupply of major crops given the level of global production in the last 3 years." Little relief, then, for seed and pesticide suppliers like DuPont, which had to lower its profit guidance in 2014 and 2015 partly because of the slumping farm economy.

PLAN OF ATTACK: DuPont's already announced drastic steps to navigate the deepening challenges of slowing economic growth in big overseas markets like China and the rising value of the U.S. dollar, including the planned layoffs of about 5,000 employees world-wide and streamlining some corporate functions. But investors remain skeptical of DuPont's prospects, with shares down more than 18% since the start of the year, more than double the declines of major U.S. stock indexes. Beyond defensive measures, shareholders will be looking for Mr. Breen and his deputies to outline plans for new products, like a just-announced project with Archer Daniels Midland to develop new corn-based packaging materials, and battle for more market share in established businesses, like pesticides and plastics.

Write to Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

January 22, 2016 13:53 ET (18:53 GMT)

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