DuPont Profit Tops Estimates on Higher Paint Pigment Prices

DuPont Co. (DD), the most valuable U.S. chemical maker, posted fourth-quarter profit that exceeded analysts’ estimates as higher prices for titanium-dioxide pigment and other products offset falling sales volumes.

Net income fell 0.8 percent to $373 million, or 40 cents a share, from $376 million, or 40 cents, a year earlier, Wilmington, Delaware-based DuPont said today in a statement. Profit excluding a gain from the sale of a business and other one-time items was 35 cents, topping the 33-cent average estimate of 17 analysts surveyed by Bloomberg.

Revenue rose 14 percent to $8.43 billion, trailing the $8.53 billion average of 10 analysts’ estimates. That’s the first miss on revenue since the third quarter of 2009, according to data compiled by Bloomberg. Sales volumes tumbled 10 percent as DuPont sold less material to solar-panel and auto makers, particularly in Asia and Europe, said Karen Fletcher, a company spokeswoman.

Chief Executive Officer Ellen Kullman is expanding production of solar materials, titanium-dioxide, Kevlar used in bullet-proof clothing and engineered crop seeds to boost per- share earnings by about 12 percent a year through 2015. Fourth- quarter earnings benefited from a 29 percent increase in prices achieved by DuPont’s performance-chemicals unit, the world’s biggest producer of titanium dioxide, a white pigment used to add opacity to paints and plastic.

Danisco Contribution

Prices (ITDIEFDN) for titanium dioxide, known by its chemical formula TiO2, have climbed amid globally tight supplies of titanium ore.

“TiO2 is currently the best performing major product line for DuPont,” Mark Gulley, a New York-based analyst at Ticonderoga Securities who rates the shares “buy,” said today in a note.

DuPont fell 0.8 percent to $48.96 at 9:36 a.m. in New York.

Also contributing to profit growth were two units formed from the $7.1 billion acquisition of Copenhagen-based Danisco A/S in June. The nutrition unit, the world’s biggest producer of food additives, and the industrial biosciences unit, the second- largest maker of industrial enzymes for biofuels, each added $34 million to pretax operating income.

The former Danisco businesses are reducing the volatility of DuPont’s earnings growth, Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said in a phone interview.

Biofuels Program

The Danisco acquisition is the most significant example of how Kullman is transforming DuPont from a chemical producer into what she calls a science company focused on meeting global demand for food, energy and safety. She is accelerating DuPont’s biofuels program with construction set to begin this year on a commercial-scale cellulosic ethanol plant.

DuPont reiterated that adjusted earnings this year will grow 7 percent to 12 percent to $4.20 to $4.40 a share, from $3.93 last year. That compares with the $4.26 average estimate of 19 analysts surveyed by Bloomberg.

The decline in fourth-quarter sales volumes was led by a 23 percent drop in the Asia-Pacific region and by a 33 percent decline in the electronics unit, which was hurt by weak demand for photovoltaics and consumer electronics. Global sales volumes hadn’t fallen since the third quarter of 2009, according a presentation posted on DuPont’s website.

“We were all expecting volume weakness and we got it,” Alembic’s Ahmed said. “The surprise was how weak volumes were in Asia.”

Items excluded from fourth-quarter net income include a $122 million benefit from the sale of an undisclosed unit in the performance-materials division. Also excluded was $100 million to settle claims that DuPont’s Imprelis herbicide killed trees, bringing total payments to $175 million, which the company will seek to recoup from insurance carriers.

To contact the reporter on this story: Jack Kaskey in Houston at

To contact the editor responsible for this story: Simon Casey at

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