DuPont (DD) Misses on Both the Top and Bottom Lines, Announces 1,500 Layoffs

Shares of DuPont (DD: Charts, News) slid roughly 8% this week, after the company posted third quarter earnings and revenue that trailed analyst estimates. Wilmington, Delaware-based DuPont earned a mere 1 cent per share, or $10 million, a steep plunge from the 48 cents per share, or $452 million, it earned in the prior year quarter.

Excluding earnings from its lagging auto-paint unit and other one-time charges, DuPont earned 32 cents per share, trailing the average analyst forecast of 47 cents per share on the same basis. Revenue also slid 9% to $7.4 billion, missing estimates. This miss on both the top and bottom lines is DuPont's first miss since the first quarter of 2009. Daily Chart
DuPont piled on the bad news, announcing 1,500 layoffs in the next 18 months and slashing its full-year earnings guidance to a range between $3.25 to $3.30 per share, compared to the $3.55 it earned in fiscal 2012. Half of DuPont's planned job cuts, which account for 2% of the company's workforce of 70,000, are expected to cut $450 million in annual costs. The company also intends to sell its performance coatings unit to private equity firm The Carlyle Group for $4.9 billion.11,000 DuPont employees will also leave with the sale of its performance coatings unit. The company's earnings were adversely impacted by the weakening demand for titanium dioxide - a key ingredient in its paint, coatings, plastic and paper products. Like industrial metals and commodities, the demand for titanium dioxide tends to rise when the global economy is strong. Since 2009, titanium dioxide sales have comprised over 60% of the DuPont's incremental earnings growth. Alembic Global Advisors analyst Hassan Ahmed noted, "If that's cycling down, it seriously jeopardizes (CEO Ellen Kullman)'s earnings growth target and has quite serious ramifications for 2013 and beyond." Despite weak demand for titanium dioxide, DuPont still intends to expand its titanium dioxide plants into Mexico and around the world to increase supply. CEO Ellen Kullman stated that her goal remains to focus on strong areas of growth - such as its agricultural segment, which posted a 4% increase in profit - while cutting costs in weaker segments. DuPont's nutrition and health segment also posted strong sales during the quarter. Although its agriculture and nutrition segments remained positive, DuPont is still reeling from a ruling in August that ordered the company to pay $1 billion in damages to rival Monsanto (MON: Charts, News) due to alleged patent infringements of its genetically engineered, pesticide-resistant seed technology. DuPont is widely considered a bellwether stock, due to the widespread use of its industrial and agricultural products. As such, the company's poor earnings contributed to a 230 point plunge in the Dow Industrial Average earlier this week. The stock trades at 11.8 times forward earnings with a 5-year PEG ratio of 3.6 - signifying that shares are fundamentally undervalued but are unlikely to rally strongly in the near future. DuPont pays a quarterly dividend of 43 cents per share - a 3.8% yield at current prices. Other News About DD DuPont Cites Weak Quarterly Revenue, Says it Will Cut 1,500 Jobs DuPont posts weak earnings and guidance. DuPont to Cut 1,500 Jobs as Profit Misses Estimates DuPont slashes 1,500 jobs to cut costs. Other Stocks in the News Starbucks Corporation: Time To Jump In Or Not? Is this as low as Starbucks will go in the near future? Marlboro Maker Altria's 3Q Profit Falls 44 pct on Charges, Despite More Cigs, Higher Prices Altria's profit slides after posting a heavy debt extinguishment charge. Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Oct 26, 2012
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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