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DuPont expects 2012 profit to beat Street

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DuPont (DD-N) expects to beat Wall Street's earnings expectation next year, with strong agricultural and chemical sales expected to offset weak shipments to electronic and housing customers.

The bullish talk from Chief Executive Ellen Kullman at the company's investor day comes less than a week after DuPont cut its forecast for the current year. It was the first time Kullman reduced the company's forecast since taking the top job at DuPont in 2009.

Its shares were up in midday trading on Tuesday, but remain nearly 5 percent below levels from last Thursday, when the forecast was cut.

Some of DuPont's electronics and polymer customers are cutting costs and drawing down their own inventories before replenishing supplies, Kullman told analysts and reporters at the Wilmington, Delaware, event.

Other units, particularly agriculture and nutrition, are performing well as a growing world population demands more food, Kullman said.

Food-related products now account for nearly half of DuPont's revenue, although the company is investing heavily in electronics.

The company, which also makes Kevlar bulletproof fabric and pigments for paint, said it expects to earn between $4.20 US and $4.40 next year.

Excluding a 17 cent-per-share expense for pensions, DuPont expects to earn $4.37 to $4.57 per share in 2012.

That compares with Wall Street's estimate of $4.23 per share, according to Thomson Reuters I/B/E/S.

"We are nurturing high-risk, high-return business models," Kullman said. "We positioned this company to emerge stronger from the recession. Our growth playbook is working."

The forecast assumes that global GDP increases 2 percent to 3 percent next year, and that industrial production jumps 4 percent, DuPont said.

The company expects its pension costs in 2012 to hit $875 million, up from some $320 million this year. The stark jump is due to lower interest rates and higher fund management expenses, the company said.

PERFORMANCE COATINGS SALE

Kullman blasted recent media reports that DuPont is selling its struggling Performance Coatings unit, which sells paint to car makers and refinishers.

The sale of the unit could net DuPont as much as $4 billion, Reuters reported in October.

"I'm quite frankly appalled at the irresponsibility of some media outlets," Kullman said.

Still, she did not point-blankly deny DuPont has the performance coatings unit up for sale.

"Time will tell about any part of our portfolio and where it sits," Kullman said. "I love all my children until I don't love them.

"If something changes, we'll be the first ones to come out and talk to you."

Several private equity firms, including KKR & Co (KKR-N), Bain Capital, TPG Capital and Onex Corp. (OCX-T) have made preliminary inquiries about the sale and talked to banks about financing a potential deal, sources have told Reuters.

DuPont expects 2012 revenue of $40 billion to $42 billion. Analysts expect $41.4 billion.

While sales of titanium dioxide paint pigment have slowed in the fourth quarter, DuPont expects the business to be strong in 2012.

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