DuPont Nurtures Seed Business

DuPont says it will increase investment in plant genetics, biotechnology, and other high-value agricultural fields by some $100 million per year. To fund the increase, the company will consolidate production assets and refocus marketing in the low-growth parts of its nutrition and crop protection businesses.

The changes include the closing or streamlining of manufacturing at about 10 locations and the reduction of its agriculture business workforce by about 1,500 worldwide. DuPont expects annual cost savings of $100 million, all of which will go to the new initiative. The firm will take a pretax charge of about $200 million in the fourth quarter to account for the restructuring.

"These actions will accelerate the momentum that is building in our seed business," says J. Erik Fyrwald, group vice president of DuPont's agriculture and nutrition business. "Our seed products are performing very well around the globe." Thus, he explains, DuPont expects significantly improved financial performance for the business in 2007.

DuPont says it has identified a number of growth opportunities for its agricultural businesses, including increased sales and marketing for seeds; investment in safer crop protection products such as its "ultra-low- toxicity" Rynaxypyr insecticide; and continued investment in Brazil, Eastern Europe and Russia, India, and China.

Indeed, the company said last week it has formed a joint venture with one of China's largest seed producers, Gansu Dunhuang Seed, to provide "top-performing corn hybrids to Chinese farmers in the spring market."

The general movement in the crop protection industry is toward "greener" chemistries, notes Roger Shamel, president of Consulting Resources, in Lexington, Mass. "I would applaud that move, plus the company's moving toward the growth areas of the globe with plans to invest in places like China, India, and Latin America," he says. "It is too bad that 1,500 jobs are going by the wayside."

DuPont also predicts that its overall 2006 earnings will be about $3.25 per share. This estimate is up from an earlier forecast of $2.86 per share, due mainly to one-time items in the fourth quarter.