DuPont Co. (DD), the biggest U.S.
chemical maker by market value, posted third-quarter profit that
beat analysts’ estimates on higher sales volumes at units that
make materials for solar panels and bullet-resistant vests.
Profit excluding some legal and pension costs was 45 cents
a share, Wilmington, Delaware-based DuPont said today in a
statement, topping the 41-cent average of 19 estimates compiled
by Bloomberg. Net sales climbed 4.7 percent to $7.74 billion,
trailing the $7.77 billion average estimate.
Sales of films and metal pastes used in solar panels drove
a 67 percent gain in operating profit at the electronics unit.
Earnings rose 16 percent at the safety and protection division,
where U.S. military demand helped sales of Kevlar anti-ballistic
fibers, DuPont said in a slide presentation.
“There is stability in photovoltaics, which has been an
unstable area for them” in the past, John Roberts, a New York-based analyst at UBS Securities LLC who recommends holding
DuPont shares, said today by phone.
DuPont rose 1 percent to $60.17 at the close in New York.
The shares have gained 34 percent this year, outpacing an 18
percent advance in the Dow Jones Industrial Average, of which
DuPont is a member.
Third-quarter net income rose to $285 million, or 30 cents
a share, from $5 million, or break even, a year earlier. Items
DuPont excluded from its adjusted per-share earnings include
some employee-retirement expenses, costs to reimburse customers
whose trees were damaged by Imprelis herbicide, and expenses to
settle a titanium-dioxide antitrust claim.
DuPont Chairman and Chief Executive Officer Ellen Kullman
is under pressure to improve the company’s performance from
Trian Fund Management LP. The New York-based hedge fund, co-founded by activist Nelson Peltz, raised its stake to more than
21 million shares, or about 2.3 percent, and met top DuPont
executives to discuss ways to boost shareholder value, people
familiar with the matter said in August.
DuPont today reiterated its full-year operating earnings
forecast of about $3.85 a share. That implies fourth-quarter
earnings of about 56 cents a share, 1 cent more than the average
of 19 analysts’ estimates compiled by Bloomberg.
“While we expect overall sequential growth in industrial
market demand will remain subdued, fourth-quarter operating
earnings will be up substantially from last year,” Kullman said
in the statement.
“There are signs of recovery in their European business,”
Roberts, the UBS analyst, said.
Installations by the solar industry may increase 10 percent
this year, DuPont said in its presentation. Sales at the world’s
biggest solar-energy companies probably rose 17 percent in the
third quarter, according to the median of analysts’ estimates
compiled by Bloomberg.
The agriculture unit posted the biggest sales gain, rising
15 percent on Latin American pesticide demand and seed prices,
the company said. That helped narrow the loss in the seasonally
weak third quarter when farmers in the U.S. and Europe haven’t
begun to buy supplies for the next planting.
“The loss was better than expected,” said Mark Gulley, a
New York-based analyst at BGC Partners LP who recommends selling
the shares. “Ag is leading the way with the best, most balanced
growth in this portfolio.”
The agriculture, safety and electronics units are the kinds
of higher-margin businesses that Kullman is focusing on while
continuing to move away from commodity chemicals.
She said in July that DuPont is considering a spinoff or
sale of its performance chemicals unit, which generated $7.2
billion of revenue last year, because of slow-growing, volatile
earnings. The unit makes cyanide, Freon refrigerants, Teflon
coating for nonstick pans, and titanium dioxide, known by its
chemical formula TiO2 and used in paints and plastics.
DuPont “is moving with urgency” to complete its review of
the unit as it considers “a wide range of options” and their
impact on cash flows, dividends, debt levels, pensions and
taxes, Kullman said today on a conference call with analysts.
She declined to say when a decision will be made.
The performance chemicals segment posted a 38 percent
decline in third-quarter operating profit as prices fell. The
business is starting to recover, with sales volumes rising 25
percent, the third consecutive quarterly improvement, DuPont
“We’re seeing clear signs this market has stabilized,”
Chief Financial Officer Nicholas Fanandakis said on the call.
Rising interest rates may cut the company’s unfunded
pension liability by $2 billion to $3 billion by year end, the
DuPont, founded in 1802 to make gunpowder, produces
thousands of products from genetically modified seeds to
plastics for auto parts.
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Simon Casey at
DuPont Co. Chairman and Chief Executive Officer Ellen Kullman