Industrial Biosciences - Operating earnings of $55 million increased $11 million, or 25 percent, as benefits from cost reductions and continued productivity improvements were partially offset by a $2 million negative impact from currency and slightly lower pricing. Operating margins improved 450 basis points. Excluding the impact of currency, operating earnings would have increased 30 percent.
Nutrition & Health - Operating earnings of $85 million increased $6 million, or 8 percent, as cost reductions, continued productivity improvements and broad-based volume growth led by probiotics, cultures, and ingredient systems, more than offset the absence of an $18 million gain on termination of a distribution agreement in the prior year and a $12 million negative currency impact. Excluding the impact of currency, operating earnings would have increased by about 23 percent.
Performance Materials - Operating earnings of $281 million decreased $45 million, or 14 percent. Cost reductions, continued productivity improvements and increased demand for Performance Polymers in global automotive markets, were more than offset by lower ethylene price and volume and $19 million of negative currency impact. Operating earnings included a $33 million benefit from the sale of a business and tax benefits associated with a manufacturing site. Excluding the impact of currency, operating earnings would have decreased by about 8 percent.
Safety & Protection - Operating earnings of $182 million decreased $23 million, or 11 percent. Cost reductions and productivity improvements were more than offset by lower demand and a $2 million negative currency impact. Volume declines in Nomex thermal-resistant fiber, Kevlar high-strength material and Sustainable Solutions offerings were driven by weakness in the oil and gas industry and in military spending. Excluding the impact of currency, operating earnings would have decreased by about 10 percent.
Outlook for 2016
Current difficult global economic conditions in agriculture and slower growth in emerging markets are expected to continue, challenging the company’s sales growth in 2016. The company expects 2016 operating earnings of $2.95 to $3.10 per share, including an expected benefit of $0.64 per share from the 2016 global cost savings and restructuring plan. The increase in the expected benefit results from identification of additional savings that will be delivered from the existing plans, including previously announced employee reduction estimates. The benefit from the 2016 global cost savings and restructuring plan will be weighted toward the second half of 2016 as specific actions continue to be implemented in the first and second quarters. 2016 operating earnings also includes approximately $0.30 per share of estimated negative currency impact due to the continued strengthening of the U.S. dollar, pressuring both the top and bottom line. A higher base tax rate, reflecting the expected geographic mix of earnings, is expected to negatively impact operating earnings by $0.05 - $0.10 per share. The currency impact is expected to be most significant in the first half of the year due to a further strengthening of the U.S. dollar. Given the seasonality of the company’s operating earnings from Agriculture in the northern hemisphere, the company anticipates approximately two-thirds of the expected currency impact to occur in the first half of 2016. Excluding the impact of currency, the guidance for full-year operating earnings per share, including expected benefits from cost savings and share repurchases, represents a 17-23 percent increase year over year.
