DuPont Sees Sales Falling -- Update
August 01 2019 - 10:59AM
Dow Jones News
By Austen Hufford
DuPont de Nemours Inc. said it expects organic sales to fall
this year, the latest company to report weakness in industrial
markets including car and electronics production.
The speciality-chemicals maker said Thursday that it expects the
soft demand in many of its businesses to continue through the
second half of the year.
"We are not counting on any improvement happening," Executive
Chairman Edward Breen told investors.
Shares rose 1.3% in morning trading as the company beat earnings
expectations for the quarter through price increases and cost
savings. DuPont had $100 million of cost savings for the quarter
and expects $450 million for the year.
DuPont, based in Wilmington, Del., emerged from the split-up of
DowDuPont Inc. this year. DowDuPont spun off its materials-science
business into a company now called Dow Inc. and its agriculture
business into a company now called Corteva Inc. DuPont is the
specialty-sciences portion of the company. Dow and DuPont agreed to
merge in 2015.
Organic sales, which excludes currency movements and
acquisitions, fell 3% in the company's second quarter with volume
declines offsetting higher prices. The sales declines were spread
across the U.S. and Canada, Europe and Asia. Sales in China were
down 3% versus the prior year, compared to a 10% drop in the first
quarter.
The company said it still expects research-and-development
spending equal to about 4% of sales this year.
"We are not touching R&D just because we are seeing a little
short-term softness," Mr. Breen said.
Sales volumes fell 12% in the company's transportation and
industrial business due to lower car production and weak demand for
electronics. The company also said its construction-products
business was hurt by slower home construction in North America.
DuPont also said it has benefited from the rise of meat
replacements because the company makes pea and soy proteins. Large
restaurant chains, including Burger King and White Castle, have
introduced new plant-based meat alternatives to their menus.
"We are pretty well positioned in that market," Chief Executive
Marc Doyle said.
DuPont said it expects adjusted earnings for the year to be
between $3.75 and $3.85 a share.
For the second quarter, DuPont had a net loss of $571 million,
compared with a profit of $1.77 billion in the comparable period a
year earlier. Its net loss was 76 cents a share compared with a
profit of $2.27 a share a year ago. The loss was largely due to an
impairment charge.
On an adjusted basis, the company said earnings were 97 cents a
share, up from 89 cents a share. Analysts polled by FactSet were
expecting adjusted earnings of 89 cents a share.
Net sales were $5.47 billion, down 6.6%. Analysts expected $6.02
billion.
--Allison Prang contributed to this article.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
August 01, 2019 10:44 ET (14:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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