22 janvier, 2008 12:09
DuPont Profit Rises as Sales Gain in Emerging Markets (Update5)
By Jack Kaskey
Jan. 22 (Bloomberg) -- DuPont Co., the third-biggest U.S. chemical maker, said fourth-quarter profit rose as increased sales of seeds and chemicals in emerging markets more than made up for weak demand from domestic homebuilders and automakers.
Profit excluding one-time items rose to 57 cents a share from 45 cents a year earlier, Wilmington, Delaware-based DuPont said today in a statement. The performance topped the 50-cent average estimate of 11 analysts surveyed by Bloomberg. Net income fell to $545 million, or 60 cents a share, from $871 million, or 94 cents, a year earlier.
Chief Executive Officer Charles O. Holliday is building paint and pigment plants in China to expand in emerging markets -- where revenue rose 20 percent -- and make the company less dependent on U.S. economic growth. DuPont said two-thirds of sales in the quarter came from outside the U.S., up from 59 percent in all of last year. Record seed sales in Brazil helped agriculture unit revenue jump 23 percent.
``South America and Brazil are off to a really good start,'' Mark Gulley, an analyst at New York-based Soleil Securities, said today in an interview. ``Pricing is very good for crop-protection chemicals and seeds.'' He recommends buying DuPont shares.
DuPont rose 10 cents to $42.80 at 12:45 p.m. in New York Stock Exchange composite trading. The shares fell 15 percent in the 12 months before today.
Holliday said Jan. 9 that profit would be about 50 cents a share. Profit was higher than forecast because the effective tax rate was 18 percent, less than an expected 25 percent, spokesman Carl Lukach said by telephone. Better-than-expected sales and cost reductions also contributed, he said.
Tax Rate
Kevin McCarthy, a New York-based analyst at Banc of America Securities, said the lower-than-expected tax rate boosted earnings by 5 cents a share. Profit was 52 cents a share after adjusting for the new rate, HSBC Securities analyst Hassan Ahmed said by telephone from London.
``The specialty nature of their portfolio drove pricing power, and they benefited from non-U.S. exposure,'' said Ahmed, who rates the shares ``overweight.'' ``Performance was strong across the board.''
Revenue rose 11 percent to $6.98 billion. Higher prices and volume gains each added 3 percent to revenue, and a weaker dollar increased revenue by 4 percent, DuPont said. Profit margins widened as DuPont trimmed costs and increased prices.
Net income in the fourth quarter of 2006 included a net benefit of $449 million, or 49 cents a share, from one-time items including tax benefits and insurance recoveries.
One-Time Items
First-quarter profit excluding some items will rise to $1.12 to $1.17 a share, from $1.07 a year earlier, DuPont said. Five analysts surveyed by Bloomberg had estimated $1.12 on average. DuPont repeated its Jan. 9 forecast for full-year earnings of $3.35 to $3.55 a share. Thirteen analysts in the Bloomberg survey had estimated $3.41, on average.
The forecast assumes no improvement in U.S. housing markets and a ``declining'' domestic auto market, Holliday said on a call with reporters. DuPont will raise prices to recoup raw-material costs that may exceed last year's 5 percent increase, he told analysts and investors on a call.
Gains will come from the agriculture and safety and protection units, emerging markets and cost controls, Holliday said. DuPont, which makes 35,000 products from Corian countertops to car paint and corn-based Sorona textiles, may acquire a maker of crop chemicals or genetically modified seeds, he said.
`Sustained Growth'
``Strong ag fundamentals and sustained growth in the emerging markets should continue to provide strength for DuPont in 2008,'' Robert Koort, a New York-based analyst at Goldman Sachs Group, said today in a report. He rates the shares ``buy.''
Sales of 30 product families, including bullet-resistant Kevlar, increased in emerging markets 18 percent last year to $4 billion, and DuPont plans to accelerate that growth, Holliday said. There are no signs demand in emerging markets will slow, Holliday said.
Fourth-quarter sales rose 5 percent in the U.S. and 14 percent elsewhere, DuPont said. Sales in developing markets included a 25 percent jump in Eastern Europe, a 22 percent increase in emerging Asian markets and a 16 percent gain in Latin America, Chief Financial Officer Jeffrey Keefer said on the investor call. China sales rose 14 percent, he said.
Revenue gains in the agriculture unit were driven by a 40 percent increase at the Pioneer seed unit, which was aided by demand in Latin America and Asia and early-season orders in Europe and the U.S., Keefer said. DuPont increased its share of corn-seed sales in Brazil and Argentina, Lukach said.
Crop Chemicals
Holliday is spending about half his research budget on crop chemicals and genetically modified crop seeds to compete with Monsanto Co., the world's largest seed producer. Corn and soybean prices rose to records this month, giving farmers more money to spend on seeds, pesticides and fertilizer.
The agriculture unit loss narrowed to $89 million from $148 million a year earlier in the historically weak period before farmers in the Northern Hemisphere begin planting.
Profit rose 54 percent in the performance materials unit, which makes plastics for cars and packaging, because of higher prices and improved demand outside the U.S., the company said. Profit in the electronics business surged 39 percent.
Profit in the coatings unit, the world's biggest maker of automotive paints, rose 5.4 percent after the company closed plants, DuPont said. Profit in the safety and protection unit rose 13 percent on sales of Kevlar, Nomex and Tyvek insulation, the company said.
Slowing U.S. housing and auto markets reduced 2007 earnings by about 20 cents a share, Holliday said.
DuPont is in the final year of a three-year effort to reduce fixed costs by $1 billion, and the company will exceed that target, Holliday said.
Capital spending in 2008 will jump about 18 percent to $2 billion as the company builds previously announced factories, CFO Keefer said.
Dow Chemical Co. is the largest U.S. chemical maker by 2006 sales, followed by Exxon Mobil Corp.
To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net .
Last Updated: January 22, 2008 12:46 EST
