DuPont operating income slips on weak titanium dioxide

16:18 PM | April 23, 2013 | Robert Westervelt

DuPont operating earnings fell 6%, to $1.4 billion, in the first quarter as weaker titanium dioxide (TiO2) earnings more than offset strong gains in its agricultural segment. DuPont reported operating earnings of $1.56/share, down 4.9% from the year-ago quarter, but 2.6% above median estimates as reported by Thomson Reuters (New York). “The first quarter finished as expected, with the strong agriculture performance and performance chemicals’ decline from peak levels last year,” said DuPont chair and CEO Ellen Kullman.

Sales of $10.4 billion were up 2%, reflecting 2% overall volume growth. Volume was primarily driven by demand increases in the agriculture segment in North America and Latin America, DuPont says. Latin America's and the United States and Canada's volumes were both up 4% overall; Asia was flat; and Europe, the Mideast, and Africa's volumes were down 2%.

The company expects sequential improvement in industrial demand as the year progresses. “We anticipate improvements in demand in the second half from industrial markets,” Kullman says. “This is based on our evaluation of country and regional forecast[s] for general industrial production, auto production, home building and construction, solar module production, and other markets.” Global industrial production was up 1% in the first quarter and “will get to 2.5% for the year, which means an improving economy as we go quarter to quarter,” Kullman says. TiO2 markets should also stabilize by the middle of the year and resume growth rates that have historically tracked GDP growth, Kullman says. 

DuPont has reaffirmed its outlook for full-year 2013 operating earnings of $3.85–4.05/share, an increase of 2–7% over 2012. For first-half 2013, the company expects operating earnings to be about 7–9% lower than the first half of 2012, primarily reflecting lower performance chemicals earnings from peak levels in the prior year. 

Agriculture segment operating earnings were $1.5 billion in the quarter, up 13%. Sales for the quarter increased 14%, to $4.7 billion, driven by strong volume growth in North America and Latin America and higher pricing from new seed and crop protection products. Pricing was up 6% in agriculture year-on-year (YOY), and segment volumes were up 8%.

Performance chemicals operating earnings fell 56% YOY, to $251 million, on weaker TiO2 results. Sales were down 17% YOY, to $1.6 billion. Pricing was down 11% YOY in performance chemicals and volume was down 6%. In other segments, DuPont reported operating income declines in electronic and communications, down 17%; nutrition and health, down 4%; and safety and protection, down 15%. The company posted operating income gains of 5% in industrial biosciences and 5% in performance materials.

DuPont also announced a 5% increase in quarterly dividend, 43 cts/share to 45 cts/share.