“We are confident that this new structure will enable us to intensify the impact of innovation on growth, while also bringing more visibility to the underlining performance of our core businesses.”
Chemical giant DowDuPont is considering selling its biomaterials arm, including its biofibre brand Sorona, and several other businesses in a bid to focus on high- growth market opportunities. US-based DowDuPont, which is the umbrella company of Dupont, confirmed the news in a first-quarter 2019 conference call on 2 May.
The businesses identified for possible sale are: photovoltaic and advanced materials, biomaterials, clean technologies, sustainable solutions, the Hemlock Semiconductor joint venture, and the DuPont Teijin Films joint venture – one of the world’s largest producers of polyester film. DuPont Teijin Films recently claimed to have made a “significant step forward” in developing a chemical recycling process for PET plastic.
DowDuPont (@DowDuPontCo) wants to step away from its “volatile” sustainability businesses in a bid to stabilise returns when it creates an independent DuPont.
Sorona and DowDuPont’s stake in the DuPont Tate & Lyle joint venture are included in the firm’s biomaterials unit. Sportswear brand Reebok approached Dupont Tate & Lyle in 2017 to help it to develop its first ‘cotton and corn’ shoe. The shoe, launched last year, is constructed from an upper made of 100% cotton, and a corn-based sole.
DuPont’s Sorona biofibres are 37% plant based and are used in a variety of applications, including automotive interiors, clothing, footwear and other items.
DuPont’s businesses identified for sale have combined annual sales of $2 billion. A DuPont spokeswoman confirmed to Bio Market Insights that these units will report results in a new non-core segment beginning on 1 June.
She added: “While DuPont Sustainable Solutions and the DuPont Teijin Films JV were previously identified for sale, we will consider the full range of strategic options for the remaining businesses Through this process, we may identify better owners or other new ways to provide the resources to accelerate growth in these businesses.”
On the conference call, DowDuPont speciality products chief operating officer Marc Doyle said: “We are confident that this new structure will enable us to intensify the impact of innovation on growth, while also bringing more visibility to the underlining performance of our core businesses.”
Elsewhere, Doyle said: “We have been very transparent about our intent to divest about 10% of our current portfolio, and have made great progress already on that front. This aspect of our commitment to aggressive portfolio management allows us to remain focused on aligning our portfolio with attractive high-growth market opportunities.”
In the same call, DowDuPont CEO Ed Breen said the company was not in “fire sale” mode and was going to “take our time”, acknowledging that the businesses were “good assets” but “volatile”.
He explained: “I hope we make a lot of progress over the next year.
“They are great businesses for someone to own. So, we want to get the right price out of them.”
DowDuPont’s total first-quarter sales, including businesses that are now part of Dow, fell almost 9%to less than $19.7 billion as profit tumbled 50% to $571 million.
Slowing auto demand and trade tensions with China are hurting DuPont’s transportation and electronics businesses, which make plastics that improve the fuel economy of cars and trucks, as well as materials for smartphone chips and displays.
On the conference call, Doyle said that DuPont saw a lot of future opportunities for investment in probiotics, auto electrification, industrial electrification, medical devices and the healthcare space.