Weaker agriculture forces DuPont to cut profit forecast
DuPont Co. cut its full-year profit forecast to adjust for the spinoff of its performance chemicals unit and the impact of lower crop prices, which are causing farmers to spend less on the company’s pesticides and seeds. Operating earnings will be $3.10 a share in 2015, down from a prior prediction of $4, said the company.
While most of the change is due to the July 1 spinoff of Chemours Co., DuPont said about 10 cents is attributable to weaker expectations for agriculture. DuPont also reported second-quarter earnings and sales that trailed analysts’ estimates. The Chemours spinoff allows DuPont chief executive officer Ellen Kullman to focus on more profitable businesses such as seeds and pesticides, her company’s largest segment by revenue.
Still, earnings at the unit fell 6.9% in the second quarter. Sales dropped 11% on lower demand for soybeans, corn and pesticides, and because of the stronger dollar. Profit was also down at four of the company’s six ot
For the third quarter, seasonally the weakest three months for the agricultural business, DuPont expects a loss widening to about $225 million from $55 million on reduced corn plantings and a slow start to the Latin American growing season.
DuPont’s earnings report is the first since Kullman defeated activist investor Trian Fund Management’s attempt in May to gain four board seats. Trian, DuPont’s fifth-biggest shareholder, has called for deep cost cuts and a potential breakup of the company, a strategy Kullman has criticized as costly and high risk. The investor hasn’t ruled out another proxy fight.
Kullman, meanwhile, plans to cut expenses this year and intends to use a $4 billion dividend from Chemours to buy back shares over 18 months. DuPont said Tuesday it will complete $2 billion of accelerated stock repurchases by the year-end
Chemours, the world’s largest producer of titanium dioxide, said in a statement Tuesday that prices for the pigment used in paint continued to decline in the second quarter amid “continued challenging market conditions.”