DuPont Co., the most valuable U.S. chemical maker, said it will eliminate about 1,500 jobs after posting a smaller third-quarter profit than analysts estimated on falling demand for paint pigment. The shares dropped.
Net income fell to $10 million, or 1 cent a share, from $452 million, or 48 cents, a year earlier, Wilmington, Delaware-based DuPont said today in a statement. Profit excluding earnings from the auto-paint unit and one-time items was 32 cents a share, trailing the 47-cent average of 14 estimates compiled by Bloomberg.
Chairman and Chief Executive Officer Ellen Kullman plans to save $450 million with job cuts and other actions as a weak global economy challenges her 12 percent earnings-growth target. About half the reductions are tied to the auto-paint business, which DuPont previously agreed to sell to Carlyle Group LP for $4.9 billion. The performance-chemicals unit led declines in the quarter amid lower demand for titanium dioxide, a white pigment used in paint known by its chemical formula TiO2.
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"Weaker than expected demand in titanium dioxide and photovoltaic markets contributed to the decline from last year's record third-quarter earnings," Kullman said in the statement. "We are addressing these challenges now to position ourselves for improved performance."
Profit this year from continuing operations will be $3.25 to $3.30 a share, which excludes one-time costs and earnings from the auto-paint unit that's being sold, DuPont said. The company previously forecast per-share adjusted earnings at the lower end of a $4.20 to $4.40 range. The average of 17 estimates was for 2012 profit of $3.91.
Company revenue fell 9.2 percent to $7.39 billion as sales volumes dropped 5 percent and average prices climbed 1 percent, DuPont said. Currency exchange reduced sales by 4 percentage points.
Profit in performance chemicals fell to $372 million, while earnings in the electronics business, which makes materials used in solar cells, dropped 60 percent to $40 million, DuPont said.
"Weak TiO2 demand is causing producers to lower their utilization rates," David Begleiter, a New York-based analyst at Deutsche Bank AG who recommends buying DuPont shares, said in an Oct. 17 note. "In North America, weak demand and high inventories are resulting in a second round of price declines this quarter."
Auto-Paint Unit
The results were released before the start of regular trading in New York, where DuPont fell 4 percent to $47.75 at 6:57 a.m. The shares gained 8.7 percent this year before today.
The sale of the auto-paint business, expected to close in the first quarter, marks DuPont's exit from a market it has served since the advent of the motor car. Kullman is shifting DuPont's focus to products that help meet global demand for food, energy and security. She is targeting a 12 percent annual increase in per-share earnings through 2015.
DuPont, founded in 1802 to make gunpowder, produces thousands of products from Corian countertops and Teflon coatings to Tyvek weather barrier and Kevlar bullet-proof fibers.
Bloomberg News
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