Bloomberg News

DuPont 2012 Profit May Rise 12% on Agriculture, Chemicals

December 13, 2011

(Updates with closing share price in last paragraph.)

Dec. 13 (Bloomberg) -- DuPont Co., the largest U.S. chemicals company by market value, said profit will rise as much as 12 percent in 2012, exceeding analysts’ estimates, as agricultural and titanium-dioxide sales increase.

Profit excluding certain items will be $4.20 to $4.40 a share, representing an increase of 7 to 12 percent from the midpoint of its 2011 forecast, the Wilmington, Delaware-based company said today in a statement. Analysts expected earnings of $4.29 a share, according to the average of 18 estimates compiled by Bloomberg. Sales will be $40 billion to $42 billion next year, from about $38 billion, DuPont said.

Chief Executive Officer Ellen Kullman said growth will be led by insecticides, genetically modified seeds and titanium dioxide pigment, as well as food ingredients and biofuels, businesses created with this year’s acquisition of Danisco A/S.

The forecast’s midpoint trails the company’s long-term growth target of 12 percent, Kullman said. “This is prudent with the macro uncertainty that surrounds us,” she said. Dupont has exceeded profit estimates in each of the 11 quarters since Kullman became CEO.

The global economy will grow as much as 3 percent next year, with China gaining 8 percent and Europe unchanged, DuPont said. The dollar may strengthen 3 percent next year versus a basket of other currencies, the company said.

Long-Term Growth

The company expects sales growth at its agricultural business of 8 to 10 percent in “the long term” with pretax operating profit margins rising to as much as 22 percent. Chief Financial Officer Nick Fanandakis said the targets are peaks that should occur within the company’s planning horizon. Seed volumes in the current planting season in Latin America may increase 40 percent, DuPont said.

DuPont raised the long-term sales growth forecast at its performance chemicals business, which makes titanium dioxide, by 1 percentage point to as much as 8 percent. Pretax operating profit margins will be as high as 24 percent next year, similar to 2011, and as much as 20 percent in the long term, DuPont said.

DuPont cut its long-term forecast for profit margins from its safety and protection division and its performance materials unit.

Weakest Outlook

Increased competition in fibers and persistent weakness in housing prompted the company to cut its outlook for margins from the safety and protection division, which makes Kevlar high- strength fibers and Tyvek weather wrap, Fanandakis said. Higher raw-material costs led DuPont to cut its long-term forecast for margins in the performance materials unit, which supplies plastics for auto parts and industrial uses.

The performance coatings unit has the weakest outlook. Sales will grow as much as 5 percent in the long term, with margins as high as 12 percent, DuPont said.

DuPont would divest units to increase shareholder value, Fanandakis said. Kullman said she was “appalled” by media reports that the company is trying to sell its coatings unit, the world’s largest maker of auto paints. The company regularly considers whether to sell units, she said.

“I love all my children equally, until I don’t love them,” Kullman said.

Pretax operating margins in the nutrition unit may rise to as much as 14 percent in the long term, from 7 percent in 2011, as the company achieves $130 million in Danisco acquisition synergies in 2012, a year earlier than forecast, the company said yesterday. Sales may increase as much as 9 percent a year.

DuPont fell 1 percent to $43.29 in New York. The shares have dropped 13 percent this year.

--Editors: Jessica Resnick-Ault, Steven Frank

To contact the reporter on this story: Jack Kaskey in Wilmington, Delaware at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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