DuPont Co. (DD:US), the biggest U.S. chemical maker by market value, forecast 2014 earnings that missed analysts’ estimates as the company predicted higher costs from foreign currency exchange.
Sales this year will climb 4 percent to about $37 billion, Wilmington, Delaware-based DuPont said today in a statement, trailing the $38.1 billion average of 17 estimates compiled by Bloomberg. Profit excluding one-time items will be $4.20 to $4.45 a share, compared with the $4.32 average of 22 estimates (DD:US).
The company also said it authorized a new $5 billion share-buyback program, with $2 billion of stock expected to be repurchased in 2014.
Exchange rates have tumbled this month across the developing world as a contraction in Chinese manufacturing added to investors’ concern about the impact of the Federal Reserve withdrawing its unprecedented stimulus. Prices for energy and some of the raw materials used by DuPont have also climbed this year.
“What was a virtue now becomes a vice in terms of emerging markets,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors who recommends buying DuPont shares, said by phone Jan. 27.
Fourth-quarter profit excluding some items was 59 cents, topping the 55-cent average estimate of 19 analysts. Net sales rose to $7.75 billion from $7.33 billion, exceeding the $7.77 billion average of 10 estimates.
The shares rose 0.5 percent to $60.24 yesterday in New York. The shares (DD:US) have declined 7.3 percent this year.
DuPont Chairman and Chief Executive Officer Ellen Kullman announced plans in October to spin off the performance-chemicals unit after Trian Fund Management LP, the activist investor led by Nelson Peltz, bought a stake in the company.
Chemical makers are facing pressure from activist investors to improve returns. DuPont in October announced it plans to spin off performance chemicals, including titanium-dioxide pigment, Teflon coatings and refrigerants, because of slow-growing, volatile earnings. The move would boost agriculture, already DuPont’s biggest unit, to 37 percent of sales.
Third Point LLC, the hedge fund founded by billionaire Dan Loeb, asked Dow Chemical Co. last week to consider splitting into separate commodity and specialty companies to improve profitability and shareholder returns. After Pershing Square Capital Management LP became the largest shareholder of Air Products & Chemicals Inc., the company announced in September that CEO and Chairman John E. McGlade would retire in 2014.
DuPont, founded in 1802 to make gunpowder, produces thousands of products from Corian countertops and Teflon coatings to Tyvek weather barrier and Kevlar bullet-proof fibers.
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