Earnings estimates for
E. I. du Pont de Nemours and Company
) are on the downswing following its lackluster third-quarter
2012 results. The Delaware-based chemical and industrial products
behemoth missed estimates in the quarter and its profit tumbled
due to lower demand across titanium dioxide and photovoltaic
markets. DuPont reduced its earnings forecast for 2012 and
announced a restructuring plan that includes headcount haircuts.
Third Quarter Revisited
DuPont logged consolidated adjusted earnings of 44 cents a share
in the third quarter, a roughly 36% decline from the year-ago
earnings of 69 cents. Including one-time items, earnings came in
at a penny per share, a roughly 98% plunge from 48 cents
registered in the prior year quarter.
Adjusted earnings from continuing operations (excluding the
divestiture of Performance Coatings business) were 32 cents per
share. The results missed the Zacks Consensus Estimate of 46
Revenues from continuing operations declined 9% year over year to
$7.4 billion, due to lower sales volumes, negative currency
impact and reduction from portfolio changes, partly offset by
higher pricing. Sales missed the Zacks Consensus Estimate of
$8.08 billion. The company saw lower sales volumes from its
Electronics and Communications and Performance Chemicals
businesses, especially in Asia Pacific.
DuPont slashed its earnings forecast for 2012 and now expects
earnings from continuing operations (excluding significant items)
to be in the band of $3.25 to $3.30 per share. Earlier, it
expected earnings to be at the lower end of its guidance range of
$4.20 to $4.40 a share.
We have discussed the quarterly results at length here:
DuPont Profit Skids, Slashing Jobs
Agreement - Estimate Revisions
Estimates for DuPont manifest an absolute downward drift,
reflecting its dismal third quarter results and reduced outlook.
Out of 14 analysts covering the stock, 12 have chopped their
estimates for the fourth quarter over the past 30 days while none
moving in the opposite direction. No movement was witnessed over
the past 7 days.
Estimates for 2012 also elicit bearish sentiment with 6 analysts
(out of 11) lowering their forecasts over the past month with no
reverse movements. No activity was witnessed over the last week.
Magnitude - Consensus Estimate Trend
Given the strong directional pressure from a string of downward
revisions, estimate for the fourth quarter dropped by 33 cents
over the past month (to 9 cents a share) while remaining static
over the past week. On a similar note, estimate for 2012 slipped
by 67 cents (to $3.34 a share) over the past 30 days and remained
stationary over the past 7 days.
DuPont is a global chemical and life sciences company with a
diverse array of product offerings. The company has adopted
aggressive acquisition and joint venture strategies to facilitate
its transformation from an industrial chemical maker to one that
has diversified businesses ranging from bulletproof vests to
solar panel films.
DuPont is witnessing significant momentum in the agriculture
business, boosted by higher volume and market share gains in seed
genetics and crop protection. Moreover, the acquisition of
Danisco has strengthened its presence in the food ingredient and
enzyme markets while expanding its foothold in industrial
biotechnology and biofuels.
The company is focused on an aggressive cost-cutting strategy
which involves headcount reductions, restructuring of work
schedules and improvement of working capital productivity. As
part of its newly announced restructuring program, it plans to
lay off 1,500 workers across the globe over the next 12 to 18
months and expects to save about $450 million from the move.
However, barring agriculture and nutrition, DuPont witnessed
weakness across a number of businesses in the third quarter.
Lower demand for photovoltaic materials led to a sharp decline in
sales in its Electronics and Communications segment.
Moreover, the demand of titanium dioxide, which is used to give
paint and other coatings a white hue, remained weak due to the
challenging economic conditions in Europe and softness in some
parts of Asia, leading to lower volumes in the Performance
Chemicals segment. The company's downward guidance revision for
the full year reflects the sustained weakness across these two
businesses and expected sequential lower profits from these units
in the fourth quarter.
DuPont also remains exposed to raw material cost inflation, which
is expected to constrict its margins in the fourth quarter.
Moreover, currency headwinds weighed on the performance of a
number of segments in the third quarter and are expected to
reduce its earnings for 2012 by 27 cents a share.
DuPont, which competes with
The Dow Chemical Company
), holds a short-term Zacks #4 Rank (Sell). We currently have a
long-term (more than 6 months) Underpeform recommendation on its
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking
discovery into two of the most celebrating stock rating systems
in use today. The Zacks Rank for stock trading in a 1 to 3
month time horizon and the Zacks Recommendation for long-term
investing (6+ months). These "Earnings Estimate Scorecard"
articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our
proven stock ratings at
BASF SE (BASFY): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis
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