By Neha Chamaria - July 27, 2012 | Tickers: DD, HUN, MON, SYT, DOW | 0 Comments

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Top line misses, but bottom line beats. Yearly guidance range is re-affirmed, but forecast is skewed toward the lower end. That sums up DuPonts (NYSE: DD) second-quarter results, not for me but for everyone else. For I could actually see a handful of positives in its second quarter, enough to tell me this ones not worth a miss.

Green rules DuPonts agriculture divisions strong second-quarter performance didnt come as a surprise. The quarter coincided with the peak planting season in the United States, and the fact that corn plantations were at record highs this year isnt news anymore. Peer Monsantos (NYSE: MON) stellar numbers last month had already given us an idea of what to expect from DuPont. As was the case with the seed king, robust sale of corn and soybean seeds and traits drove DuPonts ag divisions sales up by 13% from the year-ago period.

It would be wrong not to give credit to the huge array of new products DuPont had launched in March through its Pioneer Hi-Bred seed business to tap the upcoming planting season. In fact, an amazing 75% of the higher pricing DuPont can demand from the market is driven by the innovation its products offera fact that speaks volumes of the high quality of its products.

Unearthing opportunities DuPonts innovation will continue to be visible in its products lined up for the next few years. Some, like its pest-resistant soybean varieties to be out by 2014, are specially targeted at high-potential markets like Brazil. Most players, including Monsanto and Syngenta (NYSE: SYT) are betting big on the Latin American market, with DuPont expecting strong business from the region in the second half of the year.

Another market with immense opportunities is Africa. DuPont is stepping into it in a big way by partnering with seed company Pannar Seeda move that must be giving sleepless nights to Syngenta, which dominates the market and was even eying Pannar to strengthen its foothold.

In fact, new products together with the emerging markets growth will be keys to DuPonts ag business performance moving on. Sales from these markets were up 11% during the second quarter, and look set to climb higher as DuPont innovates and expands.

The whites catching up Sales in DuPonts performance coatings and performance chemicals divisions didnt really grow as I had thought, but remained almost flat as high prices offset low volumes. Higher prices have almost become a norm with titanium dioxide producers since last year when they aggressively started passing-on-the-buck to consumers. Yet, the good news is the sequential improvement in volumes, thanks to stability in end markets like automotive. Momentum is in fact picking up fast in markets like Asia, particularly China (yes, DuPont feels the Chinese governments stimulus to boost consumption is working for the TiO2 market). These factors, along with shrinking industry TiO2 inventory levels, signal high chances of a bounce back.

Peer Huntsman (NYSE: HUN), which is about to report its second-quarter numbers next week, is also expecting better TiO2 volumes for the quarter. The company didnt even rule out further price increases for the rest of the year. Interestingly, while many are predicting the TiO2 market to remain soft for long, the worlds largest TiO2 producer remains bullish. Not only does DuPont expect volumes to grow sequentially in the forthcoming quarters, it even expects its performance chemicals division margins for the full year to come in at the same level as last year (i.e., 25% as pre-tax operating income margin).

See the original post here:
Why Disappointing Numbers Have Re-affirmed my Positive View on this Stock