DuPont Lowers 2009 Outlook

We feature E.I. du Pont de Nemours & Company (DD - Analyst Report).

Du Pont Hits Guidance but Lowers 2009 Outlook

DuPont's (DD - Analyst Report) first quarter 2009 earnings were $.54 per share, in-line with guidance. Results reflect earnings from Agriculture & Nutrition and pharmaceuticals, strong companywide pricing and cost discipline, partly offset by the impact of a severe decline in global industrial demand.

The Agriculture & Nutrition segment performance was strong, with sales growth of 6 percent and earnings growth of 8 percent despite significant currency headwinds. Performance was driven by higher North American volumes and significant seed pricing gains.

Consolidated net sales in the first quarter of $6.9 billion were 20 percent lower than prior year, reflecting 19 percent lower volume and a net 1 percent reduction due to portfolio changes. Five percent higher local prices were offset by a 5 percent negative impact from currency. Lower sales volume principally reflects global declines in construction, motor vehicle production and consumer spending, which was magnified by inventory de-stocking across most supply chains.

Company Announced Additional Business Improvement Actions

The company is increasing its 2009 fixed cost reduction goal from $730 million to $1 billion. The company has now identified an additional $200 million in cost reduction actions, including reducing additional contractor positions and work schedule reductions.

DuPont is also developing plans for additional restructuring actions, expected to be finalized and approved in the second quarter 2009, with a targeted $70 million pre-tax savings and positive cash flow benefit in 2009.

The company is reducing 2009 capital expenditures from $1.6 billion to $1.4 billion, 30 percent below 2008 expenditures of $2.0 billion. Working capital reduction projects are fully underway and expected to deliver a $1 billion improvement over 2008, as previously announced.

The company's 2009 earnings outlook has been revised downward to a range of $1.70 to $2.10 per share, excluding any significant items. The revision anticipates that weak demand across key markets will continue throughout 2009.