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DuPont Says Auto Components, Electronics Will Help Drive Second-Half Sales
DuPont Co., the third-biggest U.S. chemical maker, said second-half sales will rise on better-than- expected automobile production and continued demand for materials used in electronics and paint.
Global auto output will increase 17 percent this year, more than a previous forecast of 13 percent, Chief Executive Officer Ellen Kullman said today on a conference call with analysts. Improved vehicle production helps the coatings unit, the world’s biggest maker of auto paint, and the performance-materials unit, which makes plastic for car parts and packaging.
Company sales will increase more than 15 percent this year, compared with a previous forecast of 10 percent and a second- quarter gain of 26 percent, Kullman said.
“We expect the recovery that we’ve seen in our business to continue, but in a more moderate pace than we’ve experienced in the first half,” Chief Financial Officer Nicholas Fanandakis said on the call. “We’re seeing that steady sequential improvement in pretty much all of our businesses.”
DuPont, based in Wilmington, Delaware, rose $1.39, or 3.6 percent, to $40.38 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 20 percent this year.
Electronics, Coatings
Sales volumes will increase about 5 percent in the second half amid improved demand for products used in electronics and coatings, such as titanium dioxide pigment, Fanandakis said. Strong second-quarter demand in the electronics and performance- chemicals units, including products such as solar-cell materials and refrigerants, has continued in the current period, he said.
Second-quarter sales of photovoltaic materials soared 150 percent, compared with the company’s 50 percent growth target, Kullman said. DuPont has plans to reach more than $1 billion in solar equipment sales by next year.
“The recovery has been stronger, especially in segments like electronics and photovoltaics, than we anticipated as we entered the year,” Kullman said.
Sales growth in Greater China, including Taiwan, will slow to 15 percent in the second half after surging 70 percent in the first half, she said. Full-year China sales will increase about 40 percent to $3 billion, the CEO said.
“You are seeing growth returning to a more sustainable pace” in the region, Kullman said.
Full-Year Forecast
Full-year earnings excluding some items will rise to $2.90 to $3.05 a share, compared with $2.03 last year, DuPont said today in a statement. That exceeds a previous prediction of $2.50 to $2.70 and the $2.64 average estimate of 14 analysts in the Bloomberg survey.
DuPont earned $2.41 a share in the first half, so the forecast implies second-half profit of 49 cents to 64 cents a share, less than the 99 cents posted a year earlier.
Net income in the second half may drop because of lower contributions from hypertension medicines Cozaar and Hyzaar, which lost U.S. patent protection in April, Fanandakis said. The drugs will add as much as $480 million to profit this year, compared with $1.04 billion in 2009, the CFO said.
Currency exchange will reduce second-half profit by 8 cents a share with the euro trading at $1.29 and by 12 cents if the euro drops to $1.24, the CFO said. The euro currently trades at $1.30.
The agriculture unit, which traditionally posts losses in the second half after planting has concluded in the Northern Hemisphere, will have a wider loss this year because of spending on growth initiatives, Fanandakis said.
Corn-Market Share
DuPont grabbed 2 percentage points of market share in North American corn seed and 4 points in domestic soybean seed this year, the second straight year for such gains, Fanandakis said.
Monsanto Co. hasn’t gained share in U.S. corn or soybean seed markets in two years.
Second-quarter net income more than doubled to $1.16 billion, or $1.26 a share, from $417 million, or 46 cents, a year earlier. Profit excluding some items was $1.17 a share, topping the 94-cent average estimate of 10 analysts surveyed by Bloomberg.
Kullman unveiled in November a plan to increase earnings 20 percent a year through 2012. She said sales gains of at least 10 percent will more than make up for the loss of royalties from Cozaar and Hyzaar.
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.
Dow Chemical Co. and Exxon Mobil Corp. are the two largest U.S. chemical makers by sales.
To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.
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