DuPont sales forecast misses expectations

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DuPontRed

Reuters.

A view of the Dupont logo on a sign at the Dupont Chestnut Run Plaza facility near Wilmington, Delaware in this file picture.

Houston - DuPont Co., the biggest US chemical maker by market value, forecast 2014 revenue that missed analysts’ estimates as the company predicted higher costs from foreign currency exchange.

Sales this year will climb 4 percent to about $37 billion, Wilmington, Delaware-based DuPont said today in a statement, trailing the $38.1 billion average of 17 estimates compiled by Bloomberg.

Profit excluding one-time items will be $4.20 to $4.45 a share, an increase of 8 percent to 15 percent, compared with the $4.32 average of 22 estimates.

The company also said it authorised a new $5 billion share- buyback program, with $2 billion of stock expected to be repurchased in 2014.

Exchange rates have tumbled this month across the developing world as a contraction in Chinese manufacturing added to investors’ concern about the impact of the Federal Reserve withdrawing its unprecedented stimulus.

Prices for energy and some of the raw materials used by DuPont have also climbed this year.

“What was a virtue now becomes a vice in terms of emerging markets,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors who recommends buying DuPont shares, said by phone January 27.

DuPont said its 2014 forecast reflects a “slightly stronger” dollar as well as lower costs for agriculture products and continuing improvement in global industrial output.

Changes to its range of operations, such as the December agreement to sell the company’s glass-laminating and vinyls unit to Japan’s Kuraray Co., reduced the sales growth forecast by 2 percentage points, DuPont said.

 

Higher Volume

 

Fourth-quarter earnings and sales were better than expected. Profit excluding some items was 59 cents a share, topping the 55-cent average estimate.

Net sales rose to $7.75 billion from $7.33 billion, exceeding the $7.77 billion average projection.

Sales volumes rose 9 percent in the quarter, helping to make up for a 2 percent drop in average prices and a 1 percent impact from strength of the dollar relative to other currencies.

The shares rose 0.5 percent to $60.24 yesterday in New York.

The shares have declined 7.3 percent this year.

DuPont Chairman and Chief Executive Officer Ellen Kullman announced plans in October to spin off the performance-chemicals unit after Trian Fund Management LP, the activist investor led by Nelson Peltz, bought a stake in the company.

 

Activist Investors

 

Chemical makers are facing pressure from activist investors to improve returns. DuPont in October announced it plans to spin off performance chemicals, including titanium-dioxide pigment, Teflon coatings and refrigerants, because of slow-growing, volatile earnings.

The move would boost agriculture, already DuPont’s biggest unit, to 37 percent of sales.

Third Point LLC, the hedge fund founded by billionaire Dan Loeb, asked Dow Chemical Co. last week to consider splitting into separate commodity and specialty companies to improve profitability and shareholder returns.

After Pershing Square Capital Management LP became the largest shareholder of Air Products & Chemicals Inc., the company announced in September that CEO and Chairman John E. McGlade would retire in 2014.

DuPont, founded in 1802 to make gunpowder, produces thousands of products from Corian countertops and Teflon coatings to Tyvek weather barrier and Kevlar bullet-proof fibers. - Bloomberg News


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