E.I. du Pont de Nemours and Company (DD)

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E. I. du Pont de Nemours and Company (DD)

Q4 2009 Earnings Call

January 26, 2010 9:00 am ET


Karen Fletcher – VP, IR

Ellen Kullman – Chairman and CEO

Nick Fanandakis – SVP and CFO


Laurence Alexander – Jefferies

Paul Mann – Morgan Stanley

Edward Yang – Oppenheimer

David Begleiter – Deutsche Bank

Frank Mitsch – BB&T Capital Markets

Kevin McCarthy – Bank of America/Merrill Lynch

Mark Gulley – Soleil Securities

John Roberts – Buckingham Research

John McNulty – Credit Suisse

P.J. Juvekar – Citi

Jeff Zekauskas – J.P. Morgan

Mark Connelly – Sterne, Agee

David Howard [ph] – Goldman Sachs

Don Carson – UBS

Sergey Vasnetsov – Barclays



Good morning. My name is John and I will be your conference operator. At this time I would like to welcome everyone to the DuPont 2009 fourth quarter investor call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (Operator instructions) To listen to the webcast, please go to www.dupont.com. Thank you.

It is now my pleasure to turn the floor over to your host, Karen Fletcher, Vice President of Investor Relations. Ma'am, you may begin your conference.

Karen Fletcher

Thanks, John. Good morning and welcome. With me this morning are Ellen Kullman, Chairman and Chief Executive Officer and Nick Fanandakis, Chief Financial Officer. The slides for today's call can be found on our website at dupont.com along with the news release issued that was issued earlier today.

Please turn to slide one. During the course of this conference call, we will make forward-looking statements. All statements that address expectations or projections about the future are forward-looking statements. Although they reflect our current expectations, these statements are not guarantees of future performance but involve a number of risks and assumptions. We urge you to review DuPont's SEC filings for a discussion of some of these factors that could cause actual results to differ materially. We will also refer to non-GAAP measures and request that you please refer to the reconciliations to GAAP statements provided with our earnings news release and on our website. And finally, we've posted supplemental information on our website that we hope is helpful to your understanding of company's performance.

With that, I'll turn the call over to Ellen.

Ellen Kullman

Thanks, Karen and good morning, everyone. During a year of extraordinary challenges, our efforts to aggressively cut costs, generate cash and focus on customers' and markets generated strong momentum going into fourth quarter. We delivered 10% sales growth in the quarter with volume increases in every region. Disciplined pricing, lower raw material costs and fixed cost productivity created especially strong operating leverage in the second half of the year.

The company met its free cash flow target for the year, invested CapEx into the company for select growth opportunities and returned cash to our shareholders in the form of a very attractive dividend yield. I'm pleased to report that during the year we surpassed our $1 billion target for fixed cost productivity and cost-cutting actions, giving us traction toward margin goals by business. We streamlined the organization into 13 business units while bringing decision making closer to our customers with greater regional accountability.

In 2009, more than any other year, it was paramount importance to stay close to customers. Our streamlining effort helped us better understand what was happening across supply chains, so we could quickly respond to changes in demand signals. That customer intimacy also led to additional opportunities for us to demonstrate the value of new products and as a result, we were prepared with expanded offerings that were ready to go when the demand signals turned up.

We launched over 1,400 new products during the year, 60% greater than 2008 and the highest number since we began tracking this metric in 2004. We also filed 286 patents in the United States, up 8% over 2008.

An important component of our overall performance was Ag & Nutrition, which benefited from strong agriculture markets around the world. This segment delivered 10% earnings growth for the full year despite significant currency headwinds. Pioneer sales team turned in strong market share gains around the world including two points of share in North American corn and three points of share in North American soy.

Overall, we performed well against our plan and in the face of formidable challenges, we positioned DuPont well for recovery.

Next, I'm going to go through the financial and segment highlights and then I will close the call with thoughts about the year ahead. Nick?

Nick Fanandakis

Thank you, Ellen and good morning, everyone. I'm pleased to report that our fourth quarter performance represented a solid finish to the most challenging year for DuPont in decades. As the global economy began to recover, we drove volumes up in all regions and continued to exercise a robust pricing discipline across all of our businesses.

Our teams around the world delivered on their commitments, which differentially he reflected the needs and realities of their regions and their markets. This global execution was a resounding expression of the directives that Ellen and the leadership team had laid out 14 months ago. Those directors allowed DuPont leaders around the world to meet or exceed their commitments to price for value, drive costs and capital productivity and to generate cash, allowing for growth investment and consistent dividend payouts.

Today, DuPont is at a great fighting weight. We're stronger and leaner than ever before and we're facing 2010 with a momentum that comes from a deep sense of accomplishment. I'm going to review the details of the quarter, pointing out our accomplishments against goal as well as how our actions are in step with a transition out of a recessionary environment.

Read the rest of this transcript for free on seekingalpha.com