DuPont Logs Lower Earnings In Q1 Due To Strong Dollar


DuPont reported first quarter earnings of $1.34 on Tuesday, down from $1.58 per share for the first quarter of 2013, with sales down across all business units.

DuPont Logs Lower Earnings In Q1 Due To Strong Dollar

The chemical maker’s first quarter operating earnings per share of $1.34 includes a $0.25 per share negative impact from currency in segment results.

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DuPont anticipates strong dollar to trim 2015 profit

The Wilmington, Del., chemical maker unveiled Q1 results Tuesday with revenues declining 9% to about $9.17 billion, missing analyst estimates of $9.4 billion. DuPont attributed the 9% drop in sales to impacts from currency (6%), portfolio changes (2%) and expected near-term industry-wide challenges in Agriculture and Performance Chemicals.

DuPont’s net income dropped 28% to $1.03 billion, or $1.13 per share, compared with $1.4 billion, or $1.54 per share, for the corresponding quarter last year.

According to Thomson Reuters I/B/E/S, analysts on average anticipated a profit of $1.31 per share on revenue of $9.41 billion.

The chemical maker, which derives 60% of sales from outside the U.S., said it anticipates a strong dollar to trim its 2015 profit by 80 cents per share, higher than its earlier forecast of 60 cents.

All segments reported lower sales as the impact of the negative currency was pervasive. DuPont witnessed a decline in the agriculture, performance chemicals and electronics and communication units. DuPont’s operating earnings in the agriculture unit were off $303 million, or 21%, while in performance chemicals, negative currency effects and lower prices and volumes for titanium dioxide drove operating earnings down 37% to $129 million.

DuPont indicated that it anticipates full-year operating earnings to be at the low end of its forecast of $4.00 – $4.20 per share. However, the chemical company is targeting annual cost cuts of $1 billion and expects the savings to add 40 cents per share to 2015 profit. DuPont anticipates deriving two-thirds of its cost savings target from work force reductions and the remaining from streamlining its asset base by consolidating facilities, or outsourcing some services.

For the quarter ended March 31, cost cut initiatives added 10 cents to DuPont’s operating profit, helping mitigate the impact of a 10% fall in agriculture sales, the company’s biggest unit.

The firm raised its quarterly dividend to 49 cents per share from 47 cents on Tuesday.

DuPont in middle of proxy war

As detailed by ValueWalk, activist investor Nelson Peltz’s Trian Management has been targeting DuPont for some time, and he is looking to get four of the company’s 12 board seats. However, the chemical company has rejected his claim, saying its board is “strong” and “independent” and has “the right mix of experience and skills”.

The activist investor has criticized DuPont for missing earnings expectations and wants DuPont to separate its materials businesses from its nutrition and health, agriculture and industrial biosciences divisions. DuPont’s shareholder meeting will be held in a few weeks on May 13.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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