By Jacob Bunge and Chelsey Dulaney
DuPont Co. Chief Executive Ellen Kullman defended the company's
diverse portfolio of businesses Tuesday, pushing back against an
activist investor's public drive to break the company in two.
Ms. Kullman, in her first public comments on the campaign by
Trian Fund Management LP, said the chemical company gains unique
competitive advantages by developing seeds for farmers, plastics
for car makers and a host of other products.
"There is a lot of power in being able to deliver greater
capability to [customers] than in being very narrow," Ms. Kullman
said in an interview after commenting earlier on Trian's proposal
in a post-earnings conference call.
Trian, headed by investor Nelson Peltz, called in September for
DuPont to divide into a growth-oriented company focused on
agriculture and nutrition and another company focused on industrial
materials set up to return cash to shareholders. Trian argued its
plan could help eliminate $2 billion to $4 billion in what the firm
said were excess annual corporate costs at DuPont, and produce more
meaningful scientific discoveries at the resulting companies.
Ms. Kullman, who has led DuPont since January 2009, said "there
are points where we and Trian are aligned," such as trimming costs
and managing DuPont's broad portfolio of businesses, which range
from producing components for high-definition television screens to
deicing fluids for airport runways. She said DuPont over the past
five years has cut $2 billion in expenses, with plans to cut
another $1 billion by 2020, while repurchasing more shares than its
peers.
DuPont plans to spin off next year its performance-chemicals
business, which makes house paints and materials for nonstick
frying pans. The company expects to file documents detailing the
plan to U.S. regulators in December, Chief Financial Officer Nick
Fanandakis told analysts on the quarterly earnings call.
While Ms. Kullman didn't rule out further changes to DuPont's
portfolio--both adding and cutting businesses--she said in the
interview that breakup plans must be viewed "in the cold, hard
daylight to understand how we create value."
"We take a look at what the breakup costs would be, what the
ongoing increased costs would be, what the lost capability would
be, and understand that opportunity versus [remaining] together,"
Ms. Kullman said.
DuPont's current portfolio gives the company advantages in
engineering and production capacity, and the flexibility to divert
more people and resources to tackle a problem or introduce products
more quickly, she said.
Ms. Kullman declined to specify whether DuPont would consider
giving Trian, which owns about 3% of DuPont shares, a seat on the
Wilmington, Del., company's board. "This is early, from the
standpoint of Trian," she said, and investors generally give DuPont
"very high marks for strong governance."
DuPont said third-quarter earnings jumped 52% because of lower
expenses, despite a 4% decline in agricultural sales due to slowing
seed demand.
DuPont reported a profit of $433 million, or 47 cents a share,
up from $285 million, or 30 cents a share, a year earlier.
Excluding certain items, operating earnings increased to 54 cents a
share from 45 cents a share.
Net sales fell 2.9% to $7.51 billion due to the sale of some
businesses.
Mr. Fanandakis warned that a sluggish economy in Europe and
strengthening U.S. dollar were likely to weigh on DuPont's
performance in the coming months.
Write to Jacob Bunge at jacob.bunge@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
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