DuPont Profit Tops Estimates as Solar Helps Electronics Unit

Tuesday, 22 Oct 2013 07:13 AM

 

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U.S. chemical maker DuPont's third-quarter profit beat analysts' estimates, helped by a strong performance in its solar panel parts and Kevlar body armor businesses.

DuPont said its current-quarter profit would be substantially higher, boosted by its agriculture business as farmers in North America buy seeds and fertilizers ahead of the spring planting season.

DuPont is focusing on agriculture, alternative energy and specialty materials to offset flagging sales in its paint pigment business. The company said in July that it was exploring options for the paint pigment unit.

The company's businesses that make the solar panel parts and Kevlar body armor together accounted for 31 percent of operating profit in the third quarter.

Profit jumped 67 percent at it electronics and communications business, which supplies metal pastes, films and resin used in solar panels.

Profit rose 16 percent at its safety and protection unit, which makes the Kevlar fiber used in bullet-proof vest for SWAT teams and made famous in the Batman comics.

However, profit fell 38 percent at the company's performance chemicals unit, which houses its paint pigment business as a fall in the prices of titanium dioxide and refrigerants more than offset higher sales volumes.

Analysts have said that DuPont may be forced by investors to exit the volatile titanium dioxide business.

"Removing the business from the portfolio is going to cause an upward shift in valuation," said Jack Murphy, a portfolio manager at hedge fund Levin Capital Strategies that owns 0.3 percent of DuPont's stock.

Murphy said the stock could trade in the high $60s if the paint business were to be hived off.

DuPont shares were little changed in pre-market trading on Tuesday. They have risen about 33 percent this year and closed at $59.46 on Monday.

AGRI GROWTH

DuPont's agriculture business, which supplies farmers with everything from seeds and pesticides to fertilizers and support services, has grown to become one of its biggest.

Agriculture sales grew 15 percent in the quarter driven by higher insecticide volumes and seed prices in Latin America. The loss fell $8 million to $62 million in the quarter, seasonally the weakest for the business.

DuPont's majority stake in South Africa-based seeds company Pannar Seed Ltd in July also helped the business cut losses in the quarter.

DuPont's total net income rose to $285 million from $5 million a year earlier, when the company recorded charges related to severance and restructuring.

Operating earnings were 45 cents per share. On that basis, analysts on average had expected 41 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $7.74 billion, but slightly missed analysts' estimates of $7.78 billion.

© 2014 Thomson/Reuters. All rights reserved.

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