) has lowered its earnings forecast for second-quarter and
full-year 2014 blaming weak performance in its core agriculture
business, sending its shares down in extended trading yesterday.
DuPont sees adjusted earnings in the second quarter to be
modestly below $1.28 per share earned a year ago. Based on that, it
has reduced its adjusted earnings guidance for 2014 to between
$4.00 and $4.10 per share from $4.20 and $4.45 per share expected
earlier. Analysts polled by Zacks currently expect earnings of
$1.46 and $4.30 per share on an average for the second quarter and
The DE-based company's shares slid as much as around 8% in
after-hours trading yesterday on the guidance cut.
In the agriculture business, sales of corn seeds are below the
company's expectations while seed inventory write-downs are higher
than what was expected earlier. While sales volumes of soybean in
North America are higher than expected, it will not fully
neutralize the decrease in corn volume. DuPont also noted that crop
protection herbicide sales were below its expectations, mostly due
to extreme winter weather.
Moreover, DuPont said that results from its performance
chemicals business the second quarter will be hurt by
lower-than-expected selling prices in refrigerants for mobile and
DuPont also provided more color on its earlier communicated
actions to support its more focused portfolio of businesses
following the spinoff of the performance chemicals unit. These
initiatives are expected to deliver cost savings in the near term
through reduction of costs associated with the separation of the
unit and productivity improvements across the board.
DuPont expects to take a restructuring charge of roughly $270
million (before tax), or 20 cents per share, post tax, in the
second quarter associated with these redesign initiatives. The
company expects to incur additional charges in future as it
implements more actions. DuPont envisions these initiatives to
generate at least $1 billion in savings by end-2019, two-thirds of
which are expected to be realized by 2015.
DuPont's profit for first-quarter 2014 tumbled year over year as
harsh winter weather hit the company's agriculture business. Both
revenues and adjusted earnings for the quarter missed Zacks
Consensus Estimates. The company's performance chemicals business
remained a weak spot in the quarter.
DuPont is disposing a number of assets as it is gradually
shifting its focus to high growth businesses, including
agriculture. The separation of the performance chemicals unit
(expected to close by mid-2015) represents a big part of this
DuPont is a Zacks Rank #4 (Sell) stock.
Other companies in the chemical space worth considering include
Compass Minerals International Inc.
). While both Compass Minerals and PetroLogistics carry a Zacks
Rank #1 (Strong Buy), Celanese sports a Zacks Rank #2 (Buy).
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DU PONT (EI) DE (DD): Free Stock Analysis
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