DuPont Co., facing a proxy showdown with activist shareholder Trian Fund Management, posted better-than-expected first-quarter earnings after cutting costs and warned the stronger dollar is putting pressure on full-year profit.
Earnings per share excluding some items was $ 1.34, Wilmington, Delaware-based DuPont said in a statement Tuesday, exceeding the $ 1.31 average estimate of 17 estimates in a Bloomberg survey.
Sales fell to $ 9.17 billion from $ 10.1 billion, missing the $ 9.39 billion average estimate. DuPont said 2015 profit will now be at the low end of its previous forecast of $ 4 to $ 4.20 a share. The average estimate is for $ 4.05.
DuPont is under pressure from Trian, which is pushing for four board seats at next month's shareholders meeting. It says the company has excessive corporate expenses and should be broken up.
The chemical company's Chairman and Chief Executive Officer Ellen Kullman has fought back, arguing that dismantling 212-year-old DuPont would be costly and high-risk. She's cutting $ 1 billion in costs this year and buying back shares to help boost earnings. DuPont said Tuesday it's raising its quarterly dividend by 2 cents a share to 49 cents.
"On cost savings, you'd think it's run, don't walk, for any cost-related activities at DuPont," John Roberts, a New York-based analyst at UBS Securities LLC who has a hold rating on the shares, said by phone before results were announced.
Hotel Sale
DuPont's cost-cutting measures include the planned sale of the historic Hotel DuPont and the DuPont Country Club, both in Wilmington. The company is soliciting bids, a person familiar with the auction said last week.
Sales in the quarter were down in every unit, led by a 14 percent drop in the performance chemicals unit, which DuPont plans to spin off later this year to shareholders as a new company called Chemours. The business makes pigments, refrigerants and Teflon non-stick coatings.
Trian wants to further split the company, separating the faster growing agriculture and nutrition businesses from more cyclical units such as safety and protection, which makes Kevlar anti-ballistic fiber and Nomex heat-resistant fabric used by firefighters.
DuPont dropped 1.6 percent to $ 71.66 at 7:02 a.m. before the start of regular trading in New York.
The company said that for 2015, the stronger dollar will hurt profit by 80 cents a share.
First-quarter net income dropped to $ 1.13 a share from $ 1.54 a year earlier. Cost cuts increased earnings by 10 cents, DuPont said.
Operating earnings fell in three of DuPont's seven units. In agriculture, the company's largest business, profit dropped 21 percent.
Corn Seed
Farmers are planting less corn, the most profitable crop for seed makers such as DuPont, in favor of soybeans. Corn prices have tumbled since their 2012 peak with bin-busting inventories and favorable growing conditions. As of March 1, U.S. stockpiles were 11 percent higher than a year earlier and the most on that date since 1987, the USDA said.
The electronics unit and performance materials unit, which supplies plastic parts to automakers, both notched gains in operating profit, while earnings in the industrial biosciences unit were unchanged from the year earlier.
Bloomberg Intelligence Agricultural Chemicals: {BI AGCH
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