DuPont 2014 Annual Report Download - page 26

Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
25
AGRICULTURE
(Dollars in millions) 2014 2013 2012
Segment sales $ 11,304 $ 11,739 $ 10,426
PTOI $ 2,668 $ 2,132 $ 1,669
PTOI margin 24% 18% 16%
2014 2013
Change in segment sales from prior period due to:
Price (1)% 5%
Volume (3)% 7%
Portfolio / Other — % 1%
Total change (4)% 13%
2014 versus 2013 Full year 2014 segment sales of $11.3 billion decreased $0.4 billion, or 4 percent, primarily due to lower corn
seed volumes in Brazil and North America and the negative impact of currency, which was partly offset by an increase in crop
protection volumes and higher local corn seed prices. In Brazil, corn seed market share and price were lower reflecting the impact
of fall armyworm resistance and a reduction in planted hectares of corn. Higher volumes in insecticides were driven by continued
growth in Rynaxypyr® and from successful launches of Cyazypyr® and new seed treatments in several markets.
2014 PTOI and PTOI margin increased due to the absence of $425 million of charges incurred in 2013 related to Imprelis® herbicide
claims, an increase of $137 million for insurance recoveries of costs related to these customer claims, a gain of $240 million
associated with the sale of the copper fungicides and land management businesses, lower performance-based compensation expense
of approximately $110 million and lower seed input costs. This was partly offset by a decrease in sales, net change in restructuring
charges of $135 million and impacts from portfolio changes. See Notes 3 and 15 to the Consolidated Financial Statements for
more information related to the company's 2014 restructuring program and the Imprelis® matter, respectively.
2013 versus 2012 Sales growth was principally driven by higher global seed prices and volumes, increased global insecticide
and fungicide volumes, and the benefit of increased ownership in Pannar Seed (Pty) Ltd, slightly offset by negative currency.
Growth in seeds reflects strong corn sales in North America and Brazil. Increased insecticide volumes were driven by demand for
Rynaxypyr®, particularly in Latin America to combat heavy insect pressure, while fungicide volume increases were led by demand
for picoxytstrobin in North America and Latin America.
2013 PTOI and PTOI margin increased on sales growth, lower charges incurred related to Imprelis® herbicide claims, and earlier
seed shipments, partially offset by higher seed input costs of about $350 million, $108 million of negative currency impact, and
the absence of a $117 million gain on the sale of a business recorded in 2012. As a result of the earlier timing of seed shipments,
representing earlier seed shipments for the Brazil safrinha corn season enabled by recent investments and earlier direct seed
shipments to North American farmers, approximately $100 million of PTOI was realized in 2013 versus 2014.
2013 PTOI included net charges of $352 million ($425 million in charges offset by $73 million of insurance recoveries) related
to Imprelis® herbicide claims compared to charges of $575 million in 2012. See Note 15 to the Consolidated Financial Statements
for more information related to the Imprelis® matter.
Outlook Farmer net income has declined and growers in Brazil’s Safrinha season and in North America are likely to reduce corn
plantings again in 2015 putting pressure on volumes in the first half of the year. In addition, crop protection volumes are expected
to be impacted by lower insect pressure in Brazil and elevated distributor inventories in the Americas.