) topped earnings expectations in the third quarter of 2013
riding on healthy gains across its electronics and performance
materials businesses and lower tax that offset weakness in its
performance chemicals unit. The results were also backed by
strength in the agricultural business that saw a double-digit
rise in sales.
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The Delaware-based chemical titan logged adjusted earnings of 45
cents per share in the quarter that beat the Zacks Consensus
Estimate by four cents. The adjusted earnings exclude one-time
items including charges associated with customer claims related
to the use of an herbicide and pension-related expenses.
Including one-time items, DuPont registered earnings from
continuing operations of 28 cents per share in the quarter
compared with a loss of 5 cents per share in the prior-year
quarter. Consolidated net income, as reported, rocketed to $285
million (or 30 cents a share) from $5 million (break even per
share) a year ago.
DuPont, earlier this year, sold its performance coatings business
to private equity firm Carlyle Group for $4.9 billion in cash.
The business has been classified as discontinued operations and
is excluded from the company's continuing operations results, on
a retroactive basis.
Net sales for the reported quarter rose roughly 5% year over year
to $7,735 million as higher sales volumes more than offset lower
selling prices and unfavorable currency impact. That, however,
missed the Zacks Consensus Estimate of $7,774 million.
Operating earnings from the electronics business that supplies
materials for solar panels in the photovoltaic industry, shot up
67% in the quarter. The performance materials business that
offers polymers and films for a host of industries raked in a 13%
rise in earnings while the safety and protection unit posted a
DuPont's Performance Chemicals division (includes paint pigment
business) remained a weak spot. Lower pricing for titanium
dioxide (TiO2), which is used to give paint and other coatings a
white hue, hurt the division's results in the reported quarter.
DuPont, in July, said it is exploring strategic options for the
struggling performance chemicals business, including a potential
sale. The company is gradually shifting its focus to high growth
businesses, including agriculture, to cut its exposure to the
beleaguered paint pigment business.
Revenues rose 15% year over year to $1.6 billion in the reported
quarter, aided by higher seed prices in Latin America and volume
gains in the insecticide business. The division's results also
benefited from the company's acquisition of majority stake in
South Africa-based seed company Pannar Seed (Pty) Limited. These
gains offset the impact of higher input costs and unfavorable
Electronics & Communications:
Sales went up 5% to $638 million on higher volumes. The company
saw volume gains in photovoltaic markets, reflecting improved
Sales rose 4% to $305 million. Increased sales of Sorona polymer
offset higher input costs.
Nutrition & Health:
Sales edged down 1% to $868 million. Productivity improvement
fuelled a rise in the division's operating earnings.
Sales inched down 1% to around $1.7 billion on account of lower
TiO2 prices which offset higher volume. TiO2 volumes increased
25% year over year.
Sales moved up 3% to roughly $1.7 billion as volume gains more
than offset a decline in selling prices. Volume gains were
witnessed across automotive, electronics and packaging markets.
Safety & Protection:
Sales rose 5% to roughly $985 million on higher volume that
offset weaker mix. Volume gains were driven by higher demand for
U.S. ballistics military protection, protective garments and
DuPont exited the quarter with a strong balance sheet with cash
and cash equivalents more than doubling year over year to roughly
$7 billion. Total borrowings and capital lease obligations was
flat year over year at around $15 billion.
DuPont backed its full-year 2013 earnings outlook and continues
to expect adjusted earnings per share of roughly $3.85. The
current corresponding Zacks Consensus Estimate is $3.81.
While DuPont sees overall growth in industrial market demand to
remain subdued sequentially in the fourth quarter, it expects
operating earnings to be considerably higher from the last year.
Despite the weakness in its Performance Chemicals segment, the
company is optimistic to deliver modest earnings growth for the
DuPont's third quarter results shed light on the underlying
condition of the chemical industry. Its peer
), which is set to report on Oct 24, will offer more visibility
on the end market scenario and demand trend for chemical
products. Another chemical major,
), will report its third quarter results after the closing bell
on Oct 24.
DuPont currently carries a short-term Zacks Rank #3 (Hold).
), which also belongs to the chemical industry, holds a Zacks
Rank #2 (Buy).