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DuPont sees ‘challenged’ first quarter but maintains forecast

4:51 PM MDT | March 17, 2014 | —Robert Westervelt

Kullman: Improving industrial production and lower ag input costs to offset early 2014 challenges..

DuPont said on 10 March that it still expects to post full-year 2014 operating earnings of $4.20-4.45/share despite “challenged” first-quarter earnings and revenue growth due to winter storms in North America and business disruptions in Ukraine. DuPont’s outlook calls for growth of 8-16% above reported full-year 2013 operating earnings of $3.88/share. DuPont reaffirms the outlook in a regulatory filing after market close on 10 March, in advance of planned investor meetings scheduled that week.

“The company expects first-quarter revenue and earnings growth will be challenged by the extended cold temperatures and winter storms in North America; business disruptions in the Ukraine; and farmer uncertainty, which may impact the timing of sales and potential changes in planted area in agriculture,” DuPont says in a regulatory filing.

The company has not quantified the impact on first-quarter results. “However, for the full-year 2014, the company expects that execution of its business plans along with continuing improvement in global industrial production and the benefit of lower agricultural input costs will outweigh the factors listed above.”

DuPont chair and CEO issued the $4.204.45/share 2014 earnings forecast on the company’s fourth-quarter earnings call on 28 January.

The consensus estimate for DuPont’s full-year earnings stands at $4.33/share, according to Thomson Reuters (New York). Analysts are forecasting DuPont’s first-quarter earnings to total $1.62/share, with second-quarter earnings expected to total $1.48/share.

DuPont “believes that nonagricultural businesses are on or ahead of plan,” says John Roberts, an analyst with UBS (New York). UBS is lowering its first-quarter earnings estimate for DuPont by 6%, or 10 cts/share, to $1.56/share, and adding the difference on to its second-quarter estimate. UBS’s full-year earnings estimate for DuPont remains at $4.30/share.

The harsh winter in North America will “mean 2014 will be a late planting season,” says Laurence Alexander, an analyst with Jefferies (New York). DuPont also notes weather impacts in its non-ag businesses, Alexander adds. “Depending on the degree to which plantings are delayed, farmers may reduce their purchases of crop protection chemicals and trigger a modest destock cycle at distributors,” he says.

In Ukraine, “DuPont’s exposure stems from a $40-million seed production facility built in 2013 in eastern Ukraine,” Alexander says. “DuPont’s comments imply that seed shipments from the facility have been impaired to a degree” because of the unrest in that country.

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