July 24 (Bloomberg) -- DuPont Co., the third-biggest U.S. chemical maker, reported an unexpected decline in second-quarter profit as raw-material costs rose and slumping U.S. auto and housing markets eroded demand for paint and kitchen countertops.

Net income dropped 0.3 percent to $972 million from $975 million a year earlier, and per-share profit was unchanged at $1.04, Wilmington, Delaware-based DuPont said today in a statement. Sales gained 5.1 percent to $8.24 billion.

The stock had its biggest decline in two years as profit missed analysts' estimates by 3 cents a share. Energy and ingredient costs rose faster than prices, and the housing slump will persist, Chief Executive Officer Charles O. Holliday Jr. said. DuPont is the world's biggest car-paint producer and the maker of Corian countertops.

``I'm not assuming anything improving in North American housing until well into 2008,'' Holliday said on a conference call with analysts.

Shares of DuPont plunged $2.78, or 5.2 percent, to $50.48 at 10:49 a.m. in New York Stock Exchange composite trading. A close at that price would mark the biggest percentage drop since July 26, 2005. Before today, the shares had gained 33 percent in the past 12 months.

The company was projected to earn $1.07 a share in the second quarter, the average estimate of 11 analysts surveyed by Bloomberg.

Autos, Housing

``You are seeing the effects of autos and housing in their numbers,'' said Gene Pisasale, who helps manage $25 billion, including DuPont shares, at Mercantile Bankshares Corp. in Baltimore. ``I was hoping they would do a bit better in agriculture, especially with corn plantings up so much.''

The National Association of Realtors on July 11 cut its 2007 sales forecast for a seventh straight month and projected that sales of single-family homes will probably fall in 2008 to the lowest since 1995. Confidence among homebuilders fell this month to the lowest in 16 years.

General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler lost a combined $15 billion last year, and Asian rivals are winning sales.

Full-year profit will be $3.15 a share, excluding a 6-cent expense related to an elastomers antitrust case, DuPont said, repeating an April 24 forecast. The average estimate of 13 analysts was $3.18.

Coatings Profit

Profit in the coatings unit fell 0.9 percent to $226 million on lower demand from U.S. carmakers and paint makers. Profit fell in the unit that makes titanium dioxide, a white pigment used in paints and plastics, because of excess inventories, spokesman Carl Lukach said. DuPont last year cut 1,500 jobs and closed car-paint plants in Europe.

Profit rose 3.2 percent to $318 million in the safety and protection segment, which makes Kevlar bullet-resistant fabrics, Corian countertops and Tyvek weather wrap used in 40 percent of U.S. homes. Sales of Corian, used in kitchens and bathrooms, were undercut by the U.S. housing slump, Lukach said.

Agriculture profit fell 0.5 percent to $428 million as demand for soybean seeds fell, and the company made $33 million in ``growth investments'' to hire more seed salespeople and speed development of genetically modified crops, DuPont said.

Soybean Seeds

Soybean-seed sales fell about 15 percent, while corn sales rose less than 15 percent, Lukach said.

U.S. farmers increased corn plantings 19 percent in 2007 and reduced soybean acreage by 15 percent. DuPont is competing for seed revenue with Monsanto Co., the largest producer of genetically modified crops.

Profit from pharmaceuticals jumped 21 percent to $241 million on sales of hypertension drugs Cozaar and Hyzaar. Royalties from the drugs, marketed by Merck & Co., will drop when U.S. patents expire in 2010 and reach zero after 2013, the company has said.

Higher prices added 13 cents to per-share profit, while rising costs reduced earnings by 15 cents a share, DuPont said.

Sales gains reflect a 2 percent increase in global prices, 1 percent demand growth and a 3 percent currency gain as the dollar weakened against the euro and other currencies, DuPont said.

``DuPont has been able to offset weak U.S. housing and auto markets with stronger international growth and disciplined cost- cutting,'' P.J. Juvekar, an analyst at New York-based Citigroup Global Markets, said in a July 13 report. He rates the shares ``buy.''

Outside U.S.

Most of DuPont's sales were outside the U.S., including 29 percent in Europe, where revenue jumped 12 percent on higher demand and the dollar's drop. Sales rose 1 percent in the U.S. on higher prices.

Holliday, 59, is in the middle of a three-year campaign to cut fixed costs by $1 billion, including $400 million this year.

DuPont is a component in the 30-stock Dow Jones Industrial Average. The index reached a record 14,021.95 on July 17 and had gained 12 percent this year. Before today, DuPont's stock was up 9.3 percent.

The company's revenue in the second quarter of 2006 was $7.84 billion.

Dow Chemical Co. is the biggest U.S. chemical maker by 2006 sales, followed by Exxon Mobil Corp.

To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.

Last Updated: July 24, 2007 10:51 EDT