EI DuPont de Nemours & Co. (DD)
Q3 2010 Earnings Call
October 26, 2010 9:00 am ET
Nicholas Fanandakis - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Ellen Kullman - Chairman, Chief Executive Officer and Member of Strategic Direction Committee
Karen Fletcher - Vice President of Investor Relations
Mark Gulley - Soleil Securities Group, Inc.
David Begleiter - Deutsche Bank AG
Jeffrey Zekauskas - JP Morgan Chase & Co
Donald Carson - Susquehanna Financial Group, LLLP
Robert Koort - Goldman Sachs Group Inc.
Lucy Watson - Jefferies & Co.
Edward Yang - Oppenheimer & Co. Inc.
Frank Mitsch - BB&T Capital Markets
Mark Connelly - Credit Suisse
P.J. Juvekar - Citigroup Inc
Previous Statements by DD
» EI DuPont de Nemours & Co. Q2 2010 Earnings Call Transcript
» E. I. du Pont de Nemours and Company Q1 2010 Earnings Call Transcript
» E. I. du Pont de Nemours and Company Q4 2009 Earnings Call Transcript
Thank you, John. Good morning, and welcome. With me this morning are Ellen Kullman, Chair and CEO; and Nick Fanandakis, CFO. The slides for today's call can be found on our website at dupont.com, along with the news release that was issued earlier today.
Please turn to Slide 1. 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 the 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 our company's performance.
Now it's my pleasure to turn the call over to Ellen Kullman.
Thanks, Karen, and good morning, everyone. Once again, I'm very pleased with what our team has accomplished, to help frame a strong underlying performance in the quarter, look at the segment results, excluding Pharmaceutical royalty income. On that basis, segment pretax operating income went from $491 million to $652 million, an increase of 33%. Driving these results with the same priorities I've shared with you before our playbook working and the disciplined execution of our business plans is paying dividends in more ways than one. Our consistent focus on market-driven product innovation, pricing discipline, emerging markets and ongoing productivity are delivering very strong results.
Slide 2 recaps DuPont's 2010 directives. I shared these directives with you last quarter and I used them consistently when talking with employees around the world. Business-specific goals are drawn from these corporate targets and ultimately, every employee recognizes and is rewarded for what they do to react to changing markets or customer demands and how they contribute to the overall success of the company.
While our directives are clear and our managing processes are sound, we must contend with dynamic market and competitive situations, so let me share some perspectives on key markets this quarter. I'll start with once related to Safety & Protection. We expected industrial market to continue to strengthen resulting in a rebound in mid-cycle businesses. This certainly played out during the quarter. Nomex sales were up more than 80% with growth driven by infrastructure spending and increase protection of workers, particularly in transportation, oil and gas, power generation and distribution.
Mid-cycle businesses are indeed starting to rebound and we're ready. We're also working on new applications for our finer denier Kevlar offering in anticipation of Cooper River plant expansion. One example is Kevlar XP, which offers lighter weight, more comfort and superior ballistic protection. Last week, we announced the launch of yet another application for Kevlar XP, this one for Hard Armor needs in the military, law enforcement and homeland security.
Of course, another key market for Safety & Protection is construction which continues to be soft. New housing starts in the U.S. are expected to be up less than 10% in 2010 compared to a very weak bottoming out last year. Commercial markets also remain soft.
Moving to Electronics, I hope you had the chance to hear directly from Dave Miller, the President of our Electronics & Communications business, when he provided an update for investors last month. You can go to our website for Dave's charts and an audio replay of that webcast. In short, Dave confirmed that photovoltaic markets remain extremely strong with healthy demand in consumer electronic and printing markets as well. Our customers demand high-performing products and a constant stream of innovation is critical to our continued success. The fantastic year we're having in this segment is a result of an R&D pipeline that is highly productive and a business team with very clear priorities, which are directly tied to our company's directives.
Moving to automotive markets. Global light vehicle builds were up 8% over third quarter of 2009. Performance Coatings and Performance Polymers benefited from continued recovery in these markets. Customer reaction and acceptance of Performance Polymers Zytel PLUS offering has been really positive with a number of adoptions since its launch in March. This product offers exceptional performance under extended exposure to heat and chemicals and is an important new offering in lightweighting of vehicles.