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

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

Q3 2012 Earnings Call

October 23, 2012 9:00 am ET


Karen A. Fletcher - Vice President of Investor Relations

Ellen J. Kullman - Chairperson of the Board and Chief Executive Officer

Nicholas C. Fanandakis - Chief Financial Officer, Executive Vice President and Principal Accounting Officer


Donald Carson - Susquehanna Financial Group, LLLP, Research Division

David L. Begleiter - Deutsche Bank AG, Research Division

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

P.J. Juvekar - Citigroup Inc, Research Division

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

Robert Koort - Goldman Sachs Group Inc., Research Division

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

Michael J. Ritzenthaler - Piper Jaffray Companies, Research Division

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



Good morning. My name is Sandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the DuPont Third Quarter 2012 Investor Call. [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. Karen, you may begin your conference.

Karen A. Fletcher

Thank you, Sandra. Good morning, everyone, and welcome. With me today are Ellen Kullman, Chair and CEO; and Nick Fanandakis, Executive Vice President and CFO. 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 will 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 request that you review the reconciliations to GAAP statements provided with our earnings news release and on our website. As a reminder, our comments on today's call regarding earnings are on an underlying basis. Please see Schedules B and C in the earnings news release for a listing of significant items and their impact by segment. Additionally, comments on today's call regarding company results are on a continuing operations basis unless specifically noted otherwise. We've posted supplemental information on our website including company restatements that we hope is helpful to your understanding of our company's performance.

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

Ellen J. Kullman

Great. Thank you, Karen, and good morning, and thank all of you for joining us. In a few minutes, we'll walk through our results for the quarter and provide color on markets and business performance. Before we do that, I want to discuss our actions to build and deliver value for shareholders, as we sharpen our competitiveness and confront our most immediate challenges. We continue to manage the company knowing that sustained growth and competitiveness require a dynamic, agile organization that is deeply connected to customers and markets. Our businesses and corporate functions are constantly working towards that goal. This is how we step up to market challenges, outperform the competition and grow. Continuing macroeconomic uncertainty and resulting slowing demand in certain sectors are reminders of why agility and productivity must be a way of life.

Today, we are announcing additional actions we have launched to improve competitiveness and accelerate market-driven innovation and growth by fine-tuning the organization, eliminating cost and expanding targeted productivity programs. This effort is somewhat surgical in that each of our businesses have assessed what action, if any, is warranted versus their market condition and competitive set. Our actions reflect differential management of the portfolio and not a one-size-fits-all approach.

I'd like to underscore some of the more important elements of what we're doing. Recent transactions involving Performance Coatings and Danisco advance DuPont's vision to be the world's most dynamic science company, with a long-term strategy of driving competitive advantage in Agriculture & Nutrition, Advanced Materials and Industrial Biotechnology, all of which represent high growth, high-margin opportunities. Over time, you will begin to see the full effect of these transactions as we redeploy capital and fully integrate Danisco and Solae, generating new growth opportunities in high-margin parts of our business.

We set aggressive cost targets for these transactions. In the case of Danisco, we're delivering $130 million in cost synergies by year end, well ahead of the original schedule. In the case of DPC, we will eliminate $230 million in residual costs associated with the divestiture. We will take the same disciplined approach to eliminate these costs as we have in addressing the Danisco cost synergies.

Based on what we learned during the separation process, we identified additional actions to reduce corporate costs to further simplify and streamline our global infrastructure. We are better aligning the design and cost of corporate functions with business growth strategies and the expected impact of changing market conditions. In addition, current uncertainty in the global economic outlook, softer demand in certain markets and strength in others require realigning business resources to match current growth opportunities and increase responsiveness to rapidly changing market realities. Businesses have identified cost-saving opportunities by optimizing supply chains, consolidating facilities and refining their organizations geographically to improve competitiveness and margins. It's important to recognize that these actions unlock capital, drive science-powered innovation and will deliver growth faster. In order to ensure continued competitiveness at both the function and business levels, our leaders identified actions to deliver $220 million in savings. This combines with the elimination of $230 million in residual costs for a total of $450 million in benefits.

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