DuPont Expects High Danisco Margins - Analyst Blog

E. I. du Pont de Nemours and Company ( DD ) announced that it expects profit margins of Danisco, acquired in 2011, to increase driven by cost savings and introduction of new products.

As per the company, pre-tax operating margins in the Nutrition and Health unit may rise between 12% and 14% in the long term. Sales in the unit are expected to increase between 7% and 9% a year from $2.5 billion in 2011. Margins are anticipated to rise after achieving synergies by 2012.

Profit margins in Industrial Biosciences are forecast to expand between 15% and 17% from 10% in 2011, as the company begins licensing technology for manufacturing butanol and ethanol from plant. Besides, sales are expected to rise between 10% and 12% a year, from roughly $700 million.

Few days back, the company also revised its profit outlook for 2011. For 2011, DuPont forecasts earnings in the range of $3.87-$3.95, down from its earlier forecast of $3.97-$4.05. The company's lowering of outlook reflects destocking in some industrial supply chains that has sped up in the current quarter, due to softening demand in consumer electronics and continued weakness in housing and construction markets.

As per the company, it is witnessing slower growth in certain segments driven by global economic uncertainty, which contributed to the ongoing conservative cash management in some supply chains.

However, not all of DuPont's businesses are suffering. As per the company, demand in its agriculture and food segment continues to be strong, due to solid volume growth during the current summer months in Latin America.

DuPont is a global chemical and life sciences company, employing more than 60,000 people worldwide with a diverse array of product offerings. With over 21,000 patents and 15,000 patent applications worldwide, DuPont sells its products in diverse markets, such as transportation, construction, apparel, agriculture, nutrition and health, packaging and electronics markets.

DuPont faces stiff competition from BASF SE ( BASFY ) and The Dow Chemical Company ( DOW ).

The company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. In addition, we reiterate our long-term Neutral recommendation on the stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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