DuPont de Nemours Inc (NYSE:DD) Q4 2014 Earnings Conference Call - Final Transcript
Jan 27, 2015 • 09:00 am ET
pursue growth. When we complete our cost savings program, our SG&A will reduce by about 15% on a run rate basis in 2016. Within that number, we are reducing our corporate costs by $200 million. On an operating earnings basis, corporate expenses as a percentage of sales will reduce to about 1.3% in 2016 from 2.3% in 2015.
I want to emphasize that this program is a DuPont initiative, completely separate from the proposed merger with Dow. We took a clean slate approach to building a right organization for the future. The changes we are making would have occurred regardless of the planned merger. The changes will make our businesses linear, stronger competitors in every market where we do business. Importantly, these efforts are bringing even greater discipline and rigor to the investments we continue to make in the businesses to maintain our competitive advantage and better connect our science to the marketplace.
The long-term success of our businesses will be driven by innovation and strong return on R&D investments. Our pipeline continues to deliver. Over the past quarter in Agriculture, we successfully launched Leptra corn hybrids for the Safrinha season. Production plans for Leptra are on track for one of the fastest technology rampups in Pioneer history in the summer season. Our two newest classes of genetics demonstrated strong harvest performance and are expected to comprise over half of our North America corn sales volume in 2016.
Qrome corn products continue to progress well towards commercialization. We will expand testing this coming summer in our IMPACT trials, as we await final import approvals in key markets. Another example of where R&D is driving productive innovation is in Nutrition & Health. In the quarter, we had saw volume growth in high value products including probiotics, cultures and ingredient systems. Demand for probiotics primarily in the US has been provided by our HOWARU products which promote respiratory health in children. Demand for cultures has been driven by YO-MIX which facilitates sugar reduction and delivers mouth feel and texture in yogurt.
Next on our list of critical initiatives is working capital. Each of our businesses has set individual goals for improvement in working capital for 2016 from a bottoms-up approach. We also launched the company-wide project on working capital to look at it from the top-down perspective. We are benchmarking our performance in payables, receivables and inventory against industry leaders and believe the opportunity for improvement is significant, as much as 1 billion in the medium-term.
Our third area of focus is capital allocation. Our capital spending is guided by long-term goals and that principle will not change. After looking hard at every project and its expected returns, we approved 2016 capital expenditures of $1.1 billion that is down from about $1.4 billion in 2015 and $1.5 billion in previous years excluding Chemours. Our 2016 plan is more in line with our depreciation and amortization. In summary, all of these activities demonstrate our focus on strengthening DuPont while creating sustainable shareholder value.