DWDP Dowdupont Inc.

By Micah Maidenberg and Jacob Bunge 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 19, 2018).

DowDuPont Inc.'s agriculture unit is taking a $4.6 billion charge in the third quarter after the business lowered its long-term expectations on sales and profits, a move that underscores challenges agribusinesses are facing in the Americas.

DowDuPont said in securities filings Thursday that it recalculated the fair value of goodwill and other intangible assets on the books of the merged Dow and DuPont company, and determined that the values of assets in its agricultural unit had fallen. The company said lower cash flow projections for the segment on weaker sales and profits in the Americas as well as currency challenges in Brazil triggered the impairment.

The company said it would write off around $4.5 billion in goodwill and $100 million in unspecified assets associated with its agricultural unit. DowDuPont said financial statements for the parent company in the quarter ended Sept. 30 won't be impacted by the impairment charge.

But shares in DowDuPont fell 4.1% in after-hours trading Thursday. The company is scheduled to release its third-quarter earnings Nov. 1.

DowDuPont's charge reflects the many challenges facing seed and pesticide makers. Five consecutive years of bumper crops in North and South America have swelled storage bins and pushed down crop prices, forcing farmers to scale back spending. DowDuPont in August reported that its agricultural sales volume fell 5% over the first half of 2018, partly because farmers planted fewer acres.

North and South American farmers' prioritization of soybeans over corn this year has also cut into seed company profits. Companies like DowDuPont and Bayer AG typically collect higher profits on corn seed, which produces a bigger crop per acre for farmers, and often includes more genes to deliver pest and herbicide resistance.

A late-arriving spring planting season delayed North American seed sales for DowDuPont, the world's second-largest seller of crop seeds and pesticides after Bayer.

DowDuPont separately filed documents previewing the strategy and operations of Corteva Agriscience, the seed and pesticide company that will be spun out from DowDuPont. The company in September named James Collins, DowDuPont's current head of agriculture businesses, as Corteva's chief executive, and anticipates the spinoff to complete by June 1, 2019.

Write to Micah Maidenberg at micah.maidenberg@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

October 19, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.