E I Du Pont De Nemours And Co (NYSE:DD) said in a statement that it is seeking to sell or spin off its performance chemical unit in order to reduce the effect of declining sales of paint pigments, which have shown negative effect on the results.
For the second quarter, earnings of the company were better than expected following, which stocks surged in the premarket trading. At the end of the second quarter, operating earnings came in at $1.28 cents per share on revenue of $9.84 billion. Analysts expected EPS to come in at $1.27 on $10.01 billion in revenue. Gross margin for the company lowered to 38.5 percent from 41.1 percent.
The Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More
Chemical segment reported a 9.5 percent drop in sales while agricultural segment gained 7.2 percent backed by the higher price and a slight increase in volume. Sales of performance materials came in lower by 1.7 percent.
“We have been carefully weighing the strong cash generation of our performance chemicals businesses against their cyclicality and lower growth profile,” DuPont Chief Executive Ellen Kullman said in a statement.
Concerns over TiO2
Titanium dioxide paint business (TiO2) of E I Du Pont De Nemours And Co (NYSE:DD) is the world’s largest and is a part of performance chemicals business. Performance of this segment is taken as a parameter for economic health.
According to BGC Partners chemicals analyst Mark Gulley, Tio2 business is facing high volatility and cyclicality, which is the major reason for the investors concern. This segment after reaching the peak fell to the lowest over the past 12 months. DuPont made it a point that it will make different strategies for every business in the performance chemical unit.
CEO Ellen Kullman told last week that short term decline, which was seen in TiO2, was coming to an end, and the fundamentals in the market are “robust”. Nick Fanandakis, the Chief Financial officer of DuPont said that the mid and long term prospects for titanium dioxide are encouraging, and the unit has been one of the most important performers in the segment generating total sales of $7.2 billion in 2012.
Peltz acquires stake in DuPont
Activist investor, Nelson Peltz, co-founder of Trian Fund Management purchased a major stake in E I Du Pont De Nemours And Co (NYSE:DD), which was revealed last week in Delivering Alpha conference presented by CNBC and Institutional Investor.
There was no comment from Peltz, but Mark Gulley said to CNBC that it is likely that Peltz will suggest the company to split in two, with agriculture, nutrition, and bio business as one and industrial chemicals business the second one. “It’s certainly a step in the right direction.”