Chemicals giant EI DuPont de Nemours & Co. (DD: Quote), commonly called DuPont, reported Tuesday a decline in second-quarter profit on reduced volumes and higher charges related to customer claims and litigation. Adjusted earnings increased and topped analysts' estimates, while top line fell short of their view.
Citing uncertainties associated with macros and currency, the company now projects fiscal 2012 earnings towards the lower end of its forecast range.
DuPont Chair and CEO Ellen Kullman said, "Our agriculture, food and bio-science businesses are performing exceptionally well globally, and our advanced materials businesses are achieving solid results despite slower growth in some key markets and continued weakness in Europe."
Agriculture segment's sales climbed 13 percent with strong growth in price and volume gains. Electronics & Communications' sales, meanwhile, were hurt by lower volume and selling prices, reflecting continued soft demand for photovoltaic materials. However, there were increased demand for smart phones and tablets.
Industrial Bio-science's sales surged 144 percent primarily due to two months acquisition benefit from the Danisco enzyme business. Nutrition & Health was benefited by acquisition of Danisco specialty food ingredients business.
Sales of Performance Chemicals and Performance Coatings were hit by 10 percent lower volume. Higher selling prices more than offset higher ore costs. Further, the company said softness in titanium dioxide volumes continued in Asia Pacific and Europe, while demand for fluropolymers were weaker.
Among geographies, sales in U.S. & Canada grew 12 percent to $5 billion, and it increased 5 percent in Asia-Pacific and 14 percent in Latin America. Meanwhile, Europe, Middle East and Africa recorded a 2 percent drop in sales.
DuPont's second quarter net income attributable to the company fell to $1.18 billion or $1.25 per share from last year's $1.22 billion or $1.29 per share.
The latest quarter results were hurt by charges of $0.23 per share comprising customer claims, settlement of litigation with Invista, partly offset by a sale gain. The prior year's charge was $0.08 per share.
Excluding significant items, attributable net income grew 7 percent to $1.39 billion and earnings per share rose 8 percent to $1.48 from $1.37 a year ago. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.46 per share for the quarter. Analysts' estimates typically exclude special items.
The company attributed the earnings growth to higher earnings from agriculture and performance materials and a prior-year acquisition benefiting Nutrition & Health and Industrial Bio-sciences.
Net sales increased 7 percent to $11.01 billion, while analysts expected $11.27 billion. The sales growth reflected higher local prices and an increase from portfolio changes, partially offset by negative currency and lower sales volume. Sales in developing markets grew 11 percent.
Looking ahead, DuPont expects fiscal 2012 adjusted earnings to be toward the lower end of its existing outlook range of $4.20 to $4.40 per share. This is in comparison to last year's comparable earnings of $3.93 per share. Analysts expect the company to report earnings of $4.25 per share for the full year.
In pre-market activity, DD shares declined $0.21 or 0.43 percent, and currently trading at $48.50.
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by RTT Staff Writer
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