DuPont 2006 Annual Report Download - page 31

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued
Agriculture & Nutrition includes the company’s wholly owned subsidiary, Pioneer, which is also the world’s
leading seed brand and a world leader in improving crop yields with hybrid and varietal seeds that improve
grower yields and provide insect protection and herbicide tolerance. The principal products of Pioneer are
hybrid seed corn and soybean seed. In 2006, farmers in North America continued to demonstrate a preference
for corn hybrids containing biotechnology traits and Pioneer had limited supplies of these products. As a
result, corn market share in North America declined slightly. In soybeans, Pioneer increased market share in
key segments supported by strong product performance. Pioneer benefited from the global launch of 22 new
soybean varieties and 90 new Pioneer»brand corn hybrids that include new combinations of corn borer, corn
rootworm and weed management traits highlighted by the expansion of the Herculex»
1
family of traits.
Agriculture & Nutrition also serves the global production agriculture industry with crop protection products in
the grain and specialty crop sectors, forestry and vegetation management. Principal crop protection products
are herbicides, fungicides, insect control products and plant growth regulators. Sales of crop protection
products declined modestly in 2006, with largest declines in herbicides in North America and Europe and
Indoxacarb insecticide in Asia Pacific, but were partially offset by higher sales in Latin America. The segment
continued to expand its presence in fruit and vegetable specialty markets and continues to expand product
offerings in the professional pest control market.
Additionally, Agriculture & Nutrition operates within the specialty food ingredients market, including soy
proteins and lecithins through its majority-owned venture with Bunge Limited, The Solae Company. Sales
from these products increased in 2006, primarily due to slightly increased volume and increased prices of soy
proteins and lecithins.
In 2006, the segment launched a restructuring plan to increase investment in plant genetics, biotechnology and
other growth opportunities while consolidating manufacturing assets, technology centers and marketing
strategies in its nutrition and crop protection businesses. The segment recorded a charge of $194 million in the
fourth quarter for employee separations and asset impairments associated with this investment and
streamlining plan. The plan includes the closure of manufacturing units and the elimination of approximately
1,500 positions. Operating costs savings of approximately $100 million per year will be reinvested into the
seed business to increase the speed to market of seed products with next-generation biotech traits (see Note 5
to the Consolidated Financial Statements).
2006 versus 2005 Sales of $6.3 billion were 1 percent lower than last year reflecting slightly lower USD
selling prices and volumes. Lower selling prices reflect declines in the crop protection market partially offset
by prices for a richer mix in corn and soybean seed. Volume declines were driven by lower corn seed sales in
North America, specialty products in India and herbicide sales in North America and Europe, partially offset
by increases in the sale of soybeans. 2006 includes some earlier than anticipated seed sales for the 2007
planting season in Europe. The segment continues to invest resources in R&D and introduced approximately
210 new products and product applications during 2006.
2006 PTOI was $507 million versus $862 million, down 41 percent. The decline in 2006 PTOI reflects the
charge of $194 million described above. In addition, 2006 PTOI reflects the sales decline and higher
production costs across most of the segment, slightly offset by income of $73 million related to technology
transfers, licensing agreements and asset sales.
2005 versus 2004 Sales of $6.4 billion increased 2 percent reflecting 4 percent higher USD selling prices
and 2 percent lower volumes. Higher selling prices reflect a richer mix in corn and soybean seed. Volume
declines were driven by lower corn seed sales in North America and specialty food ingredients partially offset
by increases in the sale of soybeans, insecticides in Latin America and herbicides for cereals in Europe.
During the year approximately 160 new products and product applications were introduced.
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Part II
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