DuPont 2015 Annual Report Download - page 32

Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
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AGRICULTURE
(Dollars in millions) 2015 2014 2013
Net sales $ 9,798 $ 11,296 $ 11,728
Operating earnings $ 1,646 $ 2,352 $ 2,480
Operating earnings margin 17% 21% 21%
2015 2014
Change in net sales from prior period due to:
Local Price and Product Mix 3 % 1 %
Currency (9)% (2)%
Volume (6)% (3)%
Portfolio and Other (1)% — %
Total change (13)% (4)%
2015 versus 2014 Full year 2015 segment net sales of $9.8 billion decreased $1.5 billion, or 13 percent, primarily due to the
negative impact of currency and lower seed and crop protection volumes, primarily in Brazil and North America, which were
partly offset by higher local corn seed prices. In Brazil, lower corn seed volume reflects the impact of a reduction in summer
planted hectares of corn and fall armyworm resistance impacting performance of certain corn hybrids. In North America, lower
soybean volume reflects between 1 and 2 points of share loss and lower soybean planted area; lower corn planted area was partially
offset by higher local corn seed prices. Lower crop protection volume is primarily due to low expected insect pressure, the adoption
of insect protected soybean varieties, higher inventories, and a challenging macro environment. Insect control volumes were also
impacted by the shutdown of the LaPorte manufacturing facility in Texas.
2015 operating earnings and operating earnings margin decreased primarily due to the negative impact of currency of $538 million,
lower sales, and an approximately $120 million negative impact of the shutdown of the LaPorte manufacturing facility and the
absence of prior year impacts from performance-based compensation adjustments, partially offset by cost reductions and continued
productivity improvements.
2014 versus 2013 Full year 2014 segment net 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® insecticide and from successful launches of Cyazypyr® insecticide and new seed treatments in
several markets.
2014 operating earnings decreased primarily due to lower corn seed volumes and the negative impact of currency which were
partially offset by higher crop protection volumes, lower performance-based compensation expense of approximately $110 million,
higher local seed prices and lower seed input costs. Operating earnings margin was about the same in each period.
Outlook Farmer net returns for row crops continue to trend down as land and rent prices have lagged the transition on lower
commodity prices as grain stocks remain at elevated levels. The company expects the economic environment in the agriculture
sector to remain challenged with corn and soybean commodity prices at the low end of normal until demand accelerates or there
is a disruption in global production. Volatile currency markets are expected to continue to present headwinds given the size of
DuPont Agriculture's businesses in Europe and Latin America. As farmers look to relative economics between crop alternatives,
the company expects a slight year over year increase in Brazil Safrinha and North America corn area, provided weather cooperates
during planting. Pioneer's order book in North America suggests a modest improvement in corn demand at the expense of soybeans
in a highly competitive seed market. In crop protection, continued weak demand for foliar-applied insecticides in Brazil and
elevated distributor inventories will continue to present challenges.