DuPont cuts costs, boosts profits in third quarter

By RANDALL CHASE

posted: 36 DAYS 8 HOURS AGO

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DOVER, Del. -The millions in cost cuts made by DuPont drove profits higher in the third quarter. Now all the chemical maker needs is for sales to rebound.

Outside of China, DuPont Co. saw double-digit sales declines almost everywhere, though conditions were better than in the first half of the year, the company said.

Chemical makers were among the first to be hit by soaring crude and energy costs last year. Then they were hit by plummeting sales in the U.S. and abroad as the housing and automotive markets imploded.

Over the past nine months Wilmington-based DuPont Co. has pared its costs by $900 million, slashed jobs and for the first time in a year it posted fatter quarterly profits.

But sales in the U.S. fell 21 percent over the past three months, and by 27 percent in Europe, Africa and the Middle East, as DuPont's customers did some cost cutting of their own.

Sales in China, however, rose 7 percent.

"We've got important opportunities to penetrate that market even further," DuPont chief financial officer Jeffrey Keefer said of China, a sentiment echoed by Oppenheimer analyst Edward Yang.

"China matters a great deal," Yang said.

There are some signs that the industry has bottomed out. The company revised its full year earnings outlook to a range of $1.95 to $2.05 per share, excluding significant items, narrowing toward the upper range its previous forecast of $1.70 to $2.10.

"The underlying demand signal that is emerging reflects a developing recovery that is shaped differently by market and by geography," CEO Ellen Kullman said Tuesday.

DuPont reported earnings of $409 million, or 45 cents per share, for the quarter ending Sept. 30, up from $367 million, or 40 cents per share, in last year's third quarter, which included a hurricane-related charge of 16 cents per share.

Signs of a stronger recovery might be found when sales improve for products like DuPont's titanium dioxide, a white pigment used in housing and automotive coatings.

Analyst Dan Ortwerth of Edward Jones said DuPont has benefited from its geographic expansion and also attempts to shift more of its portfolio to high-technology products such as solar.

"I think that's an excellent long-term strategy," Ortwerth said, though he said the company won't escape exposure to the housing and automobile industries right now.

Though third-quarter results easily beat the consensus Wall Street estimate of 33 cents a share, revenue fell from $7.4 billion to $6.1 billion.

"We see overall sequential improvement in our industrial businesses as market conditions begin to firm," said Kullman, who added that the company must not only focus on controlling costs, but also on innovation.

"I don't think it's an either-or", she said.

Dupont shares fell 75 cents to $33.87.

2009-10-20 16:36:00