) trudged lower as it pared its earnings guidance for the first
half and full-year 2013. The Delaware-based chemical titan
attributed the tweak to unfavorable weather conditions across
North America and Europe which drubbed its agriculture and
nutrition businesses in the second quarter.
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DuPont's Vice President and Chief Financial Officer Nicholas C.
Fanandakis said at the Deutsche Bank Global Industrial and Basic
Materials conference that cool weather across the twin continents
hurt revenues and drove up costs in both businesses in the
current quarter. Fanandakis further added that farm belt states
of Iowa, Illinois and Indiana saw the wettest spring, during
March to May, in nearly a dozen decades.
DuPont saw a 14% rise in agriculture sales in the last reported
quarter, buoyed by healthy demand for its corn hybrids and strong
planting activity by growers. An early and strong start in the
North American growing season bolstered the agriculture business
(roughly 45% of total sales) in the quarter.
However, growers' harvests are expected to be stymied by cool and
wet spring weather in the second quarter, which hindered planting
activity across a number of states.
The U.S. Department of Agriculture (USDA), in its recent monthly
report, cut feed gain supply forecast for this year as delayed
planting due to cool weather is expected to hurt corn yield. The
USDA now expects corn production of 14 billion bushels this year,
135 million bushels lower than its last month's forecast.
Factoring in the impact of the inclement weather, DuPont now
expects its operating earnings for the first half to be roughly
10% lower than a year ago. Earlier, it expected operating
earnings to be 7%-9% below last year. In addition, operating
earnings for the full year is now expected to be at the bottom
end of DuPont's guidance range of $3.85 to $4.05 per share issued
Shares of DuPont, which are up around 22% so far this year, fell
roughly 1.8% in pre-market trading yesterday following the
announcement. The stock fell 0.6% in regular trading to close at
Separately, DuPont, at the conference, reaffirmed its priorities
of expanding its leading footprint across the food value
chain, reinforcing its leadership position as a provider of
differentiated, high-value advanced materials, and developing
leading industrial biotechnology capabilities.
DuPont remains optimistic in achieving its long-term goals given
its portfolio strength, scientific capabilities, global reach and
strong execution. Prudent cost saving measures and new products
will also help it in achieving these targets. DuPont has a bevy
of new products in its pipeline that are expected to create value
for its customers.
However, DuPont is bogged down by weakness across a number of end
markets including titanium dioxide and photovoltaic. As such, it
is banking heavily on its agriculture chemical and nutrition
businesses to reduce its exposure on these weak markets.
DuPont, which carries a Zacks Rank #3 (Hold), will release its
second quarter results on July 23.
Other companies in the chemical space that are worth considering
Shin-Etsu Chemical Co., Ltd.
). While Shin-Etsu Chemical and Methanex retain a Zacks Rank #1
(Strong Buy), Celanese is a Zacks Rank #2 (Buy) stock.