Tags: DuPont | Profit | earnings

Price Hikes Help DuPont Profit Beat Street Views

Tuesday, 25 Oct 2011 08:55 AM

 

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Chemical maker DuPont Co posted a higher-than-expected quarterly profit Tuesday and raised its 2011 earnings forecast, pushing shares up nearly 2 percent in premarket trading.

The strong outlook comes despite a weak environment for not only chemical makers — the latter part of the year is seasonally weakest for the industry — but also the broader economy.

DuPont, which makes a range of niche products including Kevlar, Tyvek and the titanium dioxide pigment used to make paint, nevertheless was able to raise prices in the third quarter by 15 percent.

Chief Executive Ellen Kullman touted the "resilience and diversity of DuPont's business portfolio" as a defense against the rough economy.

For the third quarter, the company posted net income of $452 million, or 48 cents per share, compared with $367 million, or 40 cents per share, for the year-earlier period.

Excluding one-time items, including charges related to the buyout this year of Danish food enzyme maker Danisco, DuPont earned 69 cents per share.

By that measure, analysts had expected earnings of 56 cents per share, according to Thomson Reuters I/B/E/S.

Net sales rose 32 percent to $9.24 billion. Analysts had expected $8.79 billion.

DuPont raised prices 15 percent across its portfolio during the quarter, the largest jump in more than a decade.

Most of the price jump came in the performance chemicals unit, which makes the widely popular titanium dioxide (Ti02) pigment for paint. DuPont is the world's largest supplier of the material, which is in tight supply.

The companywide increase had an effect on demand: total volume rose only 1 percent during the quarter.

DuPont said that while demand for Ti02 remains strong, it expects a "pause" during the fourth quarter.

"Titanium dioxide remains a central element of the DuPont story," Ticonderoga Securities analyst Mark Gulley said. "We estimate that Ti02 will be about 25 percent of this year's earnings and next year could be a third."

Strong Latin American sales partially offset heavy spending in DuPont's agriculture unit, where an operating loss shrank 64 percent to $69 million.

The unit was hampered last August after DuPont recalled its widely used Imprelis herbicide. Many customers and several lawsuits had complained that the treatment has killed thousands of trees.

The company spent heavily in its safety and protection unit, which makes the popular Kevlar material for bulletproof vests. DuPont recently expanded a South Carolina Kevlar plant.

Operating income in the safety and protection unit slipped 12 percent to $118 million.

Last month a U.S. federal jury awarded DuPont $919.9 million in damages, ruling that Kolon Industries Inc had stolen Kevlar trade secrets. Kolon is appealing the ruling.

For the year, DuPont expects to earn $3.97 per share to $4.05 per share. The company had previously forecast $3.90 to $4.05.

Analysts expect 2011 earnings of $3.96 per share, according to Thomson Reuters I/B/E/S.

Shares of Wilmington, Delaware-based DuPont were up 1.9 percent at $46.95 in trading before the market opened. The stock has slipped 8 percent so far this year.

© 2014 Thomson/Reuters. All rights reserved.

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