By Jacob Bunge And Chelsey Dulaney
DuPont Co. gave a disappointing outlook for 2015, warning its
profit would take a significant hit from the strengthening U.S.
dollar and weakness in its agricultural-seed business.
The company, which faces pressure from activist investor Trian
Fund Management LP to split itself up, also said it would reach its
goal to cut $1 billion in costs well ahead schedule and outlined
plans to return more cash to shareholders through the spinoff of a
chemicals division.
"The U.S. dollar continues to strengthen against most currencies
and will be a substantial headwind for us in 2015," Chief Financial
Officer Nick Fanandakis said on a conference call on Tuesday to
discuss DuPont's fourth-quarter results.
DuPont said it expects to post per-share earnings of $4 to $4.20
for the year, below analysts' projections for $4.46 a share,
according to Thomson Reuters.
The company's fourth-quarter earnings met Wall Street
expectations, though sales declined across all segments.
Shares fell 2.5% to $72.24 in early trading Tuesday but are up
about 19.5% over the past 12 months.
The greenback's rise against other currencies makes DuPont's
seeds, chemicals and other products more expensive for its overseas
clients. About 58% of the company's sales are outside the U.S. and
Canada.
As the dollar gains strength farmers in North America and South
America have shifted more fields away from corn--DuPont's main
source of seed profits--and toward soybeans, which can be more
profitable for farmers but is a smaller business for DuPont.
The currency impacts are likely to be most significant for
DuPont in the first half of 2015, when the Wilmington, Del.,
company makes many of its North American seed sales and sells large
quantities of chemicals to European clients, Mr. Fanandakis
said.
The weaker euro, lower acreage devoted to corn and a "difficult
market pricing environment" for DuPont's performance-chemicals
division were expected to weigh on first-quarter results, Mr.
Fanandakis said.
DuPont's conglomerate structure and diverse business portfolio
have come under scathing attack from Trian over the past 18 months.
Trian, headed by Nelson Peltz, has argued that the company's share
value could effectively double if it separated into three
businesses--one aimed at agriculture and nutrition, another for
industrial materials and a third for performance chemicals, which
produces materials that go into things like nonstick frying pans
and house paint.
Trian disclosed earlier this month that it is seeking four seats
on DuPont's board.
DuPont's 2015 outlook includes a negative currency impact of 60
cents a share.
DuPont has been paring costs and trying to shift away from
lower-growth commodity businesses toward higher-growth areas, such
as nutritional products and agriculture. The company said on
Tuesday it would reach its goal of $1 billion in cost reductions by
2015 and would now aim for $1.3 billion in overall savings by
2017.
As part of the effort, DuPont is planning to spin off the
performance-chemicals segment this year. DuPont said on Tuesday
that it plans to use the proceeds of the spinoff to repurchase up
to $4 billion in shares.
For the quarter ended Dec. 31, DuPont said sales in the
performance and chemicals division fell 6.4% to $1.56 billion.
Overall, DuPont reported a profit of $683 million, or 74 cents a
share, up from $185 million, or 20 cents a share, a year earlier.
Excluding certain items, operating earnings were 71 cents a
share.
Net sales fell 5.2% to $7.38 billion, while total revenue edged
up 1% to $7.92 billion.
Analysts polled by Thomson Reuters had expected a profit of 71
cents a share and revenue of $7.8 billion.
Sales in DuPont's agricultural business fell 4.1% to $1.73
billion. DuPont warned last year that the quarter's results could
be buffeted by ongoing agricultural headwinds.
Sales in its safety and protection unit--which makes the medical
moon suits that have been used in Ebola treatment--fell 3.3% to
$943 million.
Write to Jacob Bunge at jacob.bunge@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
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