EI DuPont de Nemours & Co.
) reported earnings of 35 cents per share in the fourth quarter of
2011 compared with 50 cents in the year-ago quarter. The profit
exceeded the Zacks Consensus Estimate of 33 cents per share.
A higher tax rate in the quarter led to the year-over-year
decline in profit. Further, higher selling prices during the
quarter was offset by increased spending on selling, marketing and
research and development, higher costs for raw materials, energy
and freight as well as lower sales volumes.
For full-year 2011, the company reported earnings of $3.93 per
share, up 20% from $3.28 per share in 2010 and exceeded the Zacks
Consensus Estimate by a penny.
Sales in the quarter grew 14% to $8.4 billion due to 14%
increase in prices and the agriculture segment also contributed to
the increase in sales. The quarter witnessed declining sales
volumes due to destocking in photovoltaics, polymer and industrial
supply chains. The consumer electronics and construction division
also faced soft demand.
For the fiscal year 2011, sales jumped by 20% to $38.0
In view of the company's expanded business portfolio following
the Danisco acquisition, two new reportable segments have been
added: Industrial Biosciences and Nutrition & Health.
The Industrial Biosciences segment includes Danisco's enzyme
business and DuPont Sorona and Bio-PDO businesses, previously
reported in Other. The Nutrition & Health segment consists of
Danisco's food ingredients business and DuPont's Nutrition &
Health business, previously reported as part of the company's
Agriculture & Nutrition segment. The former Agriculture &
Nutrition segment, which was renamed Agriculture, includes the seed
and crop protection businesses.
Sales in the quarter rose 8% to $1.3 billion with a 3% growth in
volumes and a 5% rise in selling prices. This reflected a strong
and early start to the Latin American season. Higher sales led to a
decrease in pre-tax operating loss to $116 million compared with
the year ago quarter.
For the full year, sales grew 17% to $9.2 billion, with a 10%
gain in volumes, 6% rise in prices and 1% impact from portfolio
Electronics & Communications:
Sales plunged 18% to $630 million, due to a 33% decrease in sales
volumes, reflecting destocking in photovoltaics, and soft demand
for consumer electronics. The lower volumes were partially
offset by increased selling prices of 15%.
Pre-tax operating income (PTOI) decreased by 57.1% to $42
million due to lower volumes and was partially offset by OLED
technology licensing income of $20 million. For the full year,
sales increased by 15% to $3.2 billion.
For the quarter, sales and PTOI were $289 million and $34 million,
respectively, primarily reflecting the acquisition of Danisco's
enzyme business. PTOI included approximately $6 million of
amortization expense associated with the fair value step-up of
intangible assets obtained as part of the acquisition.
Sales amounted to $0.7 billion for fiscal 2011.
Nutrition & Health:
Sales of $806 million were up $468 million from the prior year,
principally due to the acquisition of Danisco's enzyme business.
PTOI was $52 million in the quarter compared with $18 million in
the prior-year quarter, reflecting the positive impact from the
Danisco acquisition and favorable product mix in Solae.
For full-year, sales amounted to $2.5 billion, up 98% from 2010,
driven by 1% increase in volumes and 92% impact from portfolio
Sales escalated 12% to $1.9 billion, with a rise of 29% in selling
prices and a decrease of 17% in volumes. Volumes declined specially
in Asia-Pacific due to stagnant demand for titanium dioxide. PTOI
increased by $118 million to $433 million due to higher selling
prices. Sales in the full-year 2011 were $7.8 billion an increase
of 23% compared with 2010.
Sales rose 8% to $1.1 billion, reflecting a 10% rise in selling
prices and a 2% decline in volumes. Higher selling prices reflect
pricing actions across all the market segments in order to offset
higher raw material costs. Lower volumes was driven by destocking
and flat/lower builds in all regions, except North America.
Demand remained strong for OEM motor vehicle coatings and
industrial coatings, particularly in the North American heavy-duty
truck market. PTOI of $58 million decreased by 18.3% due to weaker
mix and a $7 million settlement charges. Sales in the year 2011
increased 12% to $4.3 billion driven by a 2% increase in
Sales went up 1% to $1.6 billion, with a rise of 14% in higher
selling prices, partially offset by a 13% decrease in volumes and
higher raw material costs. Destocking coupled with weak demand in
consumer and industrial markets, led to lower volumes in the
PTOI of $151 million decreased $55 million on lower volumes,
absence of a combined benefit of $31 million from an acquisition in
2010 and an early termination of a supply agreement. Sales in the
year were $6.8 billion, an increase of 8% over 2010.
Safety & Protection:
Sales grew 10% to $943 million, with a 5% rise in selling prices
and the MECS acquisition also contributed to 7% increase in sales.
The sales growth was also offset by a 2% decline in volumes due to
industrial destocking in the quarter.
Higher selling prices more than offset raw material cost
increases. PTOI was flat at $94 million versus the prior-year
quarter. Sales in the segment were $3.9 billion in 2011, an
increase of 17% over the prior year.
DuPont had cash and cash equivalents of $3.6 billion as of
December 31, 2011 compared with $4.3 billion as of December 31,
2010. Long-term borrowings and capital lease obligations amounted
to $11.7 billion as of December 31, 2011 versus $10.1 billion as of
December 31, 2010.
The company generated $3.3 billion of free cash flow in 2011
versus $3.1 billion in 2010, driven by increased segment operating
income and productivity initiatives.
DuPont exceeded its fixed cost productivity and working capital
productivity target of $300 million. Fixed cost productivity
amounted to $400 million and working capital productivity came in
at $500 million in 2011.
DuPont reiterated its full year 2012 earnings outlook of $4.20
to $4.40 per share, an increase of 7% to 12% compared with 2011,
excluding significant items.
Despite soft demand for consumer electronics segment and weak
markets for housing and construction, DuPont delivered exceptional
results for the full-year 2011. We believe that the slowdown in
global economic growth could reduce the company's capital spending,
thereby adversely affecting its operating performance. Further, the
company faces stiff competition from
The Dow Chemical Company
However, markets for DuPont's agriculture and food businesses
continue to be strong, especially with a strong planting season in
In view of the above stated reasons, the company retains a Zacks
#3 Rank, which implies a short-term (1 to 3 months) Hold rating and
we have recommended the shares of the company as Neutral for the a
long-term (more than 6 months).
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