DuPont reports drop in 2Q earnings
DOVER, Del. (AP) - The chemicals giant DuPont reported a nearly 12 percent decline in second-quarter earnings Tuesday partly because of lower pricing for titanium dioxide, a widely used whitening pigment, and said it is exploring a possible sale or spinoff of its performance chemicals unit.
DuPont Co. is a global leader in production of titanium dioxide, or TiO2, but has wrestled for more than a year with sluggish demand for the whitener, which is used in broad range of products from automotive and house paints to toothpaste.
Titanium dioxide is a key part of DuPont's performance chemicals business, but CEO Ellen Kullman noted Tuesday that the markets for performance chemicals are cyclical and volatile, and that they have low growth profiles compared to other DuPont products.
"These are strong healthy businesses ... but DuPont has always embraced change," she told analysts. "We are always looking around the next corner."
Kullman said no decisions have been made and no timetable set for determining the future of the performance chemicals unit, which generated total sales of $7.2 billion in 2012.
Meanwhile, the Wilmington, Del.-based company reported net income of $1.03 billion, or $1.11 per share, for the quarter ending June 30, compared with $1.17 billion, or $1.23 per share, for the same period last year. Revenue fell 1 percent to $9.8 billion as lower selling prices and currency effects offset an overall 1 percent volume gain.
Wall Street analysts surveyed by FactSet were expecting higher earnings of $1.27 per share and revenue of $10.04 billion.
DuPont's announcement that it may shed the performance chemicals business appeared to partially offset worries about the financial performance for the quarter.
The company's shares rose 24 cents to $57.41 by midday after rising earlier in the day as high as $60.40 per share - its highest level since September 1999.
DuPont's agriculture unit continued to lead the company's overall performance, posting a 7 percent gain in sales on higher prices and a slight increase in volume. The company said agriculture segment sales grew 11 percent in the first six months of the year, driven by seed prices and volume growth in corn seeds, insecticides and fungicides. First half operating earnings are up 8 percent despite higher seed input costs, DuPont said.
"Agriculture sales remained strong in the second quarter and titanium dioxide volume improved," Kullman noted. "As expected, this was largely offset by a substantial decline in performance chemicals earnings from last year's peak levels."
The company's electronics and communications segment saw sales drop 18 percent on both lower prices and volume declines amid weak demand in photovoltaics markets.
Companywide, total segment operating earnings fell 17 percent to $1.9 billion. Overall sales volumes fell 1 percent in North America for the quarter but increased 12 percent in Latin America and 5 percent in Europe, the Middle East and Africa.