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

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

Q4 2012 Earnings Call

22 January 2013 9:00 am ET

Executives

Karen A. Fletcher – Vice President of Investor Relations

Ellen Kullman – Chairman and Chief Executive Officer

Nicholas C. Fanandakis – Chief Financial Officer & Executive Vice President

Analysts

Kevin McCarthy – Bank of America Merrill Lynch

Chris Nocella – RBC Capital Markets

David Begleiter – Deutsche Bank Research

John McNulty – Credit Suisse Securities

Mark Gulley – BGC Financial

Jeffrey Zekauskas – J.P. Morgan

Mark W. Connelly – Credit Agricole Securities (USA) Inc., Research Division

Robert Walker – Jefferies & Co.

Don Carson – Susquehanna Financial Group

Vincent Andrews – Morgan Stanley

P.J. Juvekar – Citigroup Inc, Research Division

Neal Sangani – Goldman Sachs Group Inc., Research Division

Patrick Duffy Fischer – Barclays Capital Inc.

Presentation

Operator

Good morning. My name is John and I’ll be your conference operator today. At this time, I would like to welcome everyone to the DuPont Quarterly Investor Call. (Operator Instructions) After the speakers remarks, there will be a question-and-answer session period. (Operator Instructions) Thank you.

It’s now my pleasure to turn the floor over to your host, Karen Fletcher, Vice President of Investor Relations. Karen, you may begin.

Karen A. Fletcher

Thanks, John. Good morning and welcome everyone. With me today are Ellen Kullman, Chair and CEO; Nick Fanandakis, Executive Vice President and CFO; and our incoming VP of Investor Relations, Carl Lukach. The slides for today's call can be found on our website, along with the news release that was issued earlier today.

During the course of this conference call, we’ll make forward-looking statements, and I direct you to slide 2 for our disclaimers. 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 as you to review the reconciliations to GAAP statements provided with our earnings news release is available on our website. Please note that all comments about fourth quarter full year 2012 and any historical references to earnings performance will be made on a continuing operations basis and excludes significant items.

Our comments about first quarter and full year 2013 including percentage changes from prior year will reference operating earnings, which excludes significant items and exclude non-operating pension and other post-retirement employee benefit for OpEx costs in all periods reference. So in other words, we’ll provide in comparative data on an apples-to-apples basis where appropriate.

Schedules B and C in the earnings news release provide a listing of significant items and their impact by segment. We posted supplemental information on our website that we hope is helpful to your understanding of our company’s performance.

And now it's my pleasure to turn the call over to Ellen.

Ellen Kullman

Great, thank you, Karen, and good morning, everyone. Fourth quarter earnings from continuing operations of $0.11 per share finished above our previous guidance due to the strong close of our agricultural businesses in Latin America and a solid quarter for Performance Materials.

As we discussed the declines versus last year's results primarily was due to weak demand and lower prices in Performance Chemicals market. Aside from strengthen, Ag, Performance Materials, Nutrition & Health and Industrial Biosciences, other segments saw customers and industrial markets cautious than the quarter tightly managing inventories in the face of global, economic uncertainties. Our teams executed well under the circumstances and Karen will provide detail by segment.

I’d like to share my perspectives on the full-year 2012 and following Nick and Karen's review, I'll be back to discuss our outlook for the coming year.

3% revenue growth for 2012 and $3.33 earnings per share from continuing operations were below plan and very disappointing to me. I expected cost to deliver solid results each and every year. In 2012, we saved $0.27 of currency headwinds and $0.19 for the forecasted drop-off in pharmaceutical royalties. We captured more than $130 million of acquisition synergies from Danisco and far exceeded our $300 million cost productivity and $300 million working capital productivity goals. We had double digit earnings growth in agriculture and performance materials, but all these accomplishments were not enough to overcome the sharper than expected declines in demand for two of our product groups, specifically titanium dioxide and photovoltaic materials.

We are a leading global supplier to both markets, so the single year impact in 2012 was severe. As disruptive as this was in 2012, our market sensing work is detecting signs of stabilizing in both markets. As we begin 2013, I am confident we have the right strategies and actions in place to deliver better performance. Our company is stronger today than it was just a year ago from several perspectives. We have stronger positions in key growth markets such as agriculture, food, automotive, and energy. Our innovation engine continued to deliver strong, steady flow of new and improved products with greater value to customers.

In 2012, we had a record number of new product introductions. In North America, we introduced 154 new corn hybrid and 33 new soybean varieties. These products target at local market needs bringing strong ergonomic performance and excellent yields often times under adverse weather conditions.

Industrial Biosciences introduced a next-generation phytase enzyme to the U.S. Animal Nutrition Industry designed to operate enhanced performance and significant feed cost savings for animal producers with reduced environmental pollution from livestock. In our Protection Technologies business, a new light denier Kevlar AP, which was developed using our latest technology in our Cooper River plant, has been introduced in automotive tires in Europe. On the Performance Materials area, our Zytel PLUS engineering polymer was selected by a major auto OEM in India as a lighter, stronger material for charge air coolers to be used on several turbo diesel powered vehicles.

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