DuPont Co., the most valuable U.S. chemical maker, raised its 2011 earnings forecast and posted second-quarter profit that beat analysts’ estimates as prices rose on demand for products such as paint pigment.
Profit in 2011 will be $3.90 to $4.05 a share, excluding costs for the acquisition of Danisco A/S and a licensing payment, Wilmington, Delaware-based DuPont said today in a statement. That tops the $3.86 average estimate of 13 analysts’ estimates compiled by Bloomberg. DuPont’s previous forecast was $3.65 to $3.85, excluding acquisition costs. Second-quarter earnings without the costs were $1.37 a share, exceeding the $1.34 average estimate of 12 analysts surveyed.
DuPont, which bought Danisco last month to expand in food ingredients and biofuels, has beaten profit estimates for 10 straight quarters since Ellen Kullman became chief executive officer. Average prices for its products climbed 11 percent in the quarter, the most in at least a decade. Profit gains were led by an 84 percent increase at the performance-chemicals unit, the largest maker of titanium-dioxide paint pigment.
“They beat on prices, especially titanium dioxide,” Mark Gulley, a New York-based analyst at Ticonderoga Securities LLC who rates the shares “buy,” said in a telephone interview. Profit from making the white pigment, which adds opacity and brightness to paints, plastics and paper, more than doubled, he estimated.
DuPont rose 2 cents to $52.30 at 4:15 p.m. in New York Stock Exchange composite trading. The shares gained 4.9 percent this year.
“We are increasing our earnings outlook for 2011 based on strong performance year-to-date and confidence in our business plans for the second half of the year,” Kullman said in the statement.
Kullman is investing in agriculture, pigments and solar energy to boost per-share earnings about 12 percent a year through 2015. DuPont paid 33.4 billion kroner ($6.44 billion) for Copenhagen-based Danisco, the world’s biggest producer of food additives and the second-largest maker of industrial enzymes, which are used in the production of biofuels.
Net income climbed 5.1 percent to $1.22 billion, or $1.29 a share, from $1.16 billion, or $1.26, a year earlier. Net sales increased 19 percent to $10.3 billion, beating the $9.87 billion average estimate of analysts in the Bloomberg survey.
Higher prices added 80 cents to per-share earnings in the quarter, outpacing higher raw-material expenses and other variable costs of 46 cents, DuPont said. Sales volumes rose 2 percent in the quarter and currency exchange boosted sales by 3 percent.
Sales volumes will increase about 5 percent in the second half of the year, the same as the first half, Kullman said on a conference call with analysts.
Pretax operating profit at the performance-chemicals unit rose to $503 million as titanium dioxide and refrigerants contributed to 28 percent higher prices. Sales volumes fell 1 percent as floods shut a Mississippi plant and disrupted shipping, said Karen Fletcher, a company spokeswoman.
Profit at the agriculture unit, DuPont’s biggest business, rose 11 percent to $826 million on higher sales of pesticides and seeds. DuPont’s Pioneer unit, the world’s second-biggest seed company after Monsanto Co. (MON), gained market share in North American corn and soybeans, Kullman said on the call.
Earnings more than doubled to $38 million in the newly created nutrition unit, which includes Danisco’s food additives unit. Industrial biosciences, created from Danisco’s enzymes business, posted $10 million of earnings.
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