The world’s second-leading chemical company, DuPont (DD) has recently announced that its subsidiary, Pioneer Hi-Bred, plans to construct a commercial and parent soybean seed production facility in New Madrid County, Missouri. Pioneer is building the $55 million project to meet rising demand for its products and help farmers meet the strong global demand for grain.
Pioneer Hi-Bred, a DuPont business, is the world’s leading source of customized solutions for farmers, livestock producers and grain and oilseed processors. The Des Moines, Iowa-based company provides access to advanced plant genetics in nearly 70 countries.
Pioneer expects initial operations to begin by the end of 2011 after construction is completed. The new plant is expected to employ about 50 people. As the first Pioneer production facility in Missouri, the new plant primarily will serve soybean producers in the US. Pioneer also has a research facility in Miami, Missouri, as well as corn, soybean, sorghum and wheat seed outlets in the state.
According to DuPont, soybean varieties produced by Pioneer show a 1.3 bushel per acre yield advantage against all competitive varieties. Pioneer® brand soybeans, with the original Roundup Ready® gene, have an average a 2.7 bushel per acre yield advantage over competitors.
Pioneer has recently launched the high yielding Y Series soybean. The company is using Accelerated Yield Technology and marker-assisted selection to boost the yield potential and improve the agronomic performance of these varieties.
Last week, DuPont had announced that it is emerging stronger from the global economic crisis after undertaking several measures to better position it for sustainable growth. The company has focused on aggressive cost-cutting and plans to capture $1 billion in fixed cost productivity and $1 billion in working capital productivity gains during 2010−2012. A focus on emerging markets and strong performance in the Agriculture & Nutrition segment will likely generate about 10% growth in the top line during 2009 2012.
DuPont hopes to grow earnings at 20% between 2009 and 2012. However, the U.S. housing market slump has impacted fertilizer products such as Corian and Tyvek. Weak North American automotive and construction markets have hurt its Coatings business. Pharmaceutical royalties are also expected to decline after the expiry of patents in 2010. Hence, we have a Neutral rating on the stock.
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