Chemical manufacturer EI DuPont de Nemours & Company (DD) is spending $40 million on advanced plant genetics business under its Iowa-based Pioneer Hi-Bred subsidiary. DuPont is planning to open new research facilities on advanced plant genetics, which would help farmers boost agricultural productivity. DuPont’s research and development (R&D) efforts are geared to double agricultural productivity by 2050 and pep up the Iowa economy.

DuPont is focused on increasing food production. The company claims to invest about half of its $1.4 billion annual R&D budget to advancing this goal.

DuPont is also planning to construct a commercial and parent soybean seed production facility in Missouri through Pioneer Hi-Bred. Pioneer is building the $55 million project to help farmers meet the strong global demand for grain. Pioneer expects the plant to begin operating by the end of 2011. As the first Pioneer production facility in Missouri, the new plant will primarily serve soybean producers in the US. Pioneer also has a research facility in Missouri as well as corn, soybean, sorghum and wheat seed outlets in the state.

DuPont has been focusing 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 2010−2012.

DuPont hopes to grow earnings at 20% between 2010 and 2012. However, the US housing market slump has impacted products such as Corian and Tyvek under its Coatings & Pharmaceutical segment. 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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