) divulged its strategic and operational priorities for this year
and beyond during its annual investor day in Wilmington, Del.
Chairman and CEO Ellen Kullman highlighted three strategic
priorities that are aimed at boosting shareholder value and
driving multi-year sales and earnings.
Kullman noted that DuPont's priorities are expansion of its
leading footprint across the food value chain, reinforcing its
leadership position as a provider of differentiated, high-value
advanced materials, and development of leading industrial
biotechnology capabilities. Boosting R&D returns will be a
DuPont reaffirmed, at the meet, its compound annual growth rate
(CAGR) targets for sales and operating earnings per share of 7%
and 12%, respectively. The company said that it is optimistic in
achieving these long-term goals given its portfolio strength,
scientific capabilities, global reach and strong execution.
Prudent cost saving measures and new products will also help in
achieving these targets.
DuPont has embarked on an aggressive cost-cutting strategy by
reducing fixed costs, retrenching employees, restructuring work
schedules and improving working capital productivity. The company
expects pre-tax cost savings of at least $300 million from its
restructuring measures in 2013. DuPont also has a bevy of new
products in its pipeline that are expected to create value for
Nicholas C. Fanandakis, DuPont's Vice President and Chief
Financial Officer, presented long-term profit margin targets for
each business segment at the meet. For the agriculture business,
the company expects margins of as much as 24% and sales CAGR of
up to 10%.
DuPont is witnessing strong momentum in its agriculture business
and is seeing healthy demand for its corn hybrids. Strong
planting activity by growers across North and Latin
America, product innovation, solid order book and healthy supply
of seeds and crop protection products strongly positions DuPont
in the agriculture market.
For both electronics and industrial biosciences franchises,
long-term margins are expected to be as high as 18% while sales
CAGR target has been pegged at up to 9%.
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In electronics, DuPont expects to benefit from higher adoption of
the organic light emitting diodes (OLED) technology for TVs and
is well placed to capture incremental opportunities in consumer
electronics and photovoltaic markets. For industrial bioscience,
higher demand for enzymes in emerging geographies and increasing
use of sustainable materials represents the driving factors.
The nutrition and health unit is expected to see margins and
sales CAGR of as much as 14% and 9%, respectively. The rapidly
growing specialty food ingredients market has been seen as an
For the performance chemical business, DuPont foresees margins
and sales CAGR of as much as 20% and 5%, respectively. The
division remains challenged by weak titanium dioxide market
fundamentals. Lower pricing for titanium dioxide, which is used
to give paint and other coatings a white hue, is hurting
performance chemical results. Nevertheless, key growth drivers
include expansion of Altamira pigment plant in Mexico and roll
out of next-generation refrigerants.
DuPont's performance materials business is expected to see profit
margins of as much as 18% and sales CAGR of up to 5%. Healthy
trends are being witnessed across packaging and light-weighting
Lastly, margins and sales CAGR for safety and protection has been
set at as much as 23% and 7%, respectively. Increased
infrastructure investments and product innovation are among key
drivers for growth.
DuPont carries a Zacks Rank #3 (Hold).
Other companies in the chemical industry that are worth
Shin-Etsu Chemical Co., Ltd.
). While Shin-Etsu Chemical retains a Zacks Rank #1 (Strong Buy),
both Celanese and Methanex hold a Zacks Rank #2 (Buy).