) beat expectations in the fourth quarter of 2012 but higher
costs and weakness across titanium dioxide and photovoltaic
markets contributed to a sharp fall in its profit.
The Delaware-based company posted adjusted earnings from
continuing operations (excluding the divestiture of performance
coatings business) of 11 cents per share for the fourth quarter,
down from the year-ago earnings of 26 cents. That, however, beat
the Zacks Consensus Estimate by a couple of cents.
The adjusted earnings exclude one-time items including charges
of $66 million associated with the company's restructuring
measures. DuPont is laying off 1,500 workers across the globe as
part of a restructuring plan which is expected to fetch roughly
$450 million in savings. Charges (totaling $168 million)
associated with asset impairment and legal claims by customers
related to the use of an herbicide also hurt the bottom line.
Including one-time items, the company recorded earnings from
continuing operation of 2 cents per share in the quarter, a sharp
decline of roughly 94% from 31 cents registered in the prior-year
quarter. Consolidated net income, as reported, tumbled 70% year
over year to $111 million or 12 cents a share. Weak results from
the company's performance chemicals business contributed to the
Net sales for the quarter were essentially flat year over year
at $7,325 million as negative currency impact and reduction from
portfolio changes neutralized higher sales volumes. Sales beat
the Zacks Consensus Estimate of $7,253 million. Volume rose 3%
driven by gains across Asia Pacific and Latin America.
Despite currency headwinds, DuPont's Agriculture segment
delivered healthy sales in the quarter. Moreover, the Danisco
acquisition contributed to the growth across the company's
Industrial Biosciences and Nutrition & Health
For full-year 2012, adjusted earnings from continuing
operation was $3.33 per share compared with $3.55 recorded a year
ago, missing the Zacks Consensus Estimate by a nickel. Reported
earnings per share from continuing operation fell to $2.61 per
share from $3.30 a year ago.
Net sales, for the year, rose roughly 3% year over year to
$34,812 million, but fell behind the Zacks Consensus Estimate of
DuPont's shares rose 1.9% in pre-market trading, reflecting
the better-than-expected fourth quarter results.
Sales climbed 18% year over year to $1.5 billion in the fourth
quarter. An 11% growth in volumes coupled with a 7% rise in
pricing more than offset the unfavorable currency exchange
Electronics & Communications:
Sales edged down 1% to $622 million as a 2% gain in volume was
offset by a 3% fall in pricing. Sales were affected by weak
demand for photovoltaic materials, partly masked by higher demand
for materials used in smartphones and tablets.
Sales rose 4% to $300 million on the back of higher volumes and
pricing. Strong sales of Sorona polymer and gains in food enzymes
in Europe led to higher volume.
Nutrition & Health:
Sales rose 6% to $853 million on higher volumes and better local
pricing across the board. Healthy demand for probiotics, cultures
and enablers led to higher sales volumes.
Sales slipped 15% to $1.6 billion on account of an 8% decline in
volumes and 7% lower selling prices. Lower fluoropolymers demand
across the U.S. and Europe contributed to the decline in volumes
while a weak titanium dioxide market hurt pricing.
Sales went down 5% to $1.5 billion as a 3% gain in volumes was
more than offset by a 5% decline in selling prices and a 3%
reduction from a portfolio change. Industrial and electronics
markets continued to show weakness, offsetting strong demand in
the North American automotive market.
Safety & Protection:
Sales crept up 2% to $964 million. Increased demand for
sustainable solutions offerings and U.S. residential and
commercial construction products led to a 3% increase in volume.
This was, in part, offset by a 1% decline in pricing due to
DuPont, in August 2012, struck a deal with private equity firm
Carlyle Group to divest its performance coatings business for
$4.9 billion in cash. The transaction is expected close in the
first quarter of 2013, subject to necessary approvals. The move
is intended to better focus on accretive businesses like
agriculture and nutrition, bio-based industrials, and advanced
Beginning with third-quarter 2012 results, the Performance
Coatings segment has been classified as discontinued operations
and is excluded from the company's continuing operations results,
on a retroactive basis.
Financial Health and Shareholder Returns
DuPont exited 2012 with cash and cash equivalents of $4.3
billion, up 19% year over year. Long-term borrowings and capital
lease obligations was $10.5 billion as at the end of the year, an
11% year over year decline.
The company, in late 2012, announced a $1 billion share
repurchase program. The new buyback program will be backed by the
proceeds from the divestiture of the performance coating business
and will complete this year.
For 2013, the company expects adjusted earnings to rise 2%-7%
year over year to a band of $3.85 to $4.05 per share. Revenues
for the full year are expected to be roughly $36 billion. The
corresponding Zacks Consensus Estimates for revenues and earnings
per share are $36.2 billion and $3.78.
DuPont's results shed light on the underlying condition of the
chemical industry. The other big Kahuna of the U.S. chemical
The Dow Chemical Company
), which is slated to report on January 31, will offer more color
on the end market scenario and demand trend for chemical
DuPont currently holds a short-term Zacks Rank #3 (Hold).
) are among the other big chemical names to report this earnings
season with both holding a Zacks Rank #2 (Buy).
AIR PRODS & CHE (APD): Free Stock Analysis
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis
EASTMAN CHEM CO (EMN): Free Stock Analysis
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