DuPont Profit Beats Estimates Ahead of Trian Vote

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Photographer: Jay LaPrete/Bloomberg

DuPont Co., facing a proxy showdown with activist shareholder Trian Fund Management, posted better-than-expected first-quarter earnings after cutting costs and warned the stronger dollar is putting pressure on full-year profit.

Earnings per share excluding some items was $1.34, Wilmington, Delaware-based DuPont said in a statement Tuesday, exceeding the $1.31 average estimate of 17 estimates in a Bloomberg survey.

Sales fell to $9.17 billion from $10.1 billion, missing the $9.39 billion average estimate. DuPont said 2015 profit will now be at the low end of its previous forecast of $4 to $4.20 a share because of the dollar. The average estimate is for $4.05.

“They will get credit for delivering a modest beat in the face of 25-cents-per-share currency headwinds,” James Sheehan, an analyst at Suntrust Robinson Humphrey who rates DuPont a hold, said by phone Tuesday. “That’s offset by their guiding to the low end of the range for the year.”

DuPont fell 2.4 percent to $71.07 at 9:50 a.m. in New York.

Trian is pushing for four board seats at DuPont’s shareholders meeting next month. It says the company has excessive corporate expenses and should be broken up.

The chemical company’s Chairman and Chief Executive Officer Ellen Kullman has fought back, arguing that dismantling 212-year-old DuPont would be costly and high-risk. She’s cutting $1 billion in costs this year and buying back shares to help boost earnings. DuPont said Tuesday it’s raising its quarterly dividend by 2 cents a share to 49 cents.

Hotel Sale

DuPont’s cost-cutting measures include the planned sale of the historic Hotel DuPont and the DuPont Country Club in Wilmington. The company is soliciting bids, a person familiar with the auction said last week.

Cost reductions added 10 cents per share to first-quarter earnings and will contribute 40 cents for the full year, DuPont said. Still, for 2015, it sees the stronger dollar hurting profit by 80 cents.

The Bloomberg Spot Dollar Index, which tracks a basket of 10 leading global currencies against the greenback, has climbed 18 percent in a year.

Sales in the first quarter were down in every unit, led by a 14 percent drop in performance chemicals, which makes pigments, refrigerants and Teflon non-stick coatings. DuPont plans to spin off the business as a new company called Chemours later this year.

Corn Seed

Trian wants to go further, advocating the separation of DuPont’s faster-growing agriculture and nutrition businesses from more cyclical units such as safety and protection, which makes Kevlar anti-ballistic fiber and Nomex heat-resistant fabric used by firefighters.

First-quarter net income dropped to $1.13 a share from $1.54 a year earlier. Operating earnings fell in three of DuPont’s seven units. In agriculture, the company’s largest business, profit dropped 21 percent.

Farmers are planting less corn, the most profitable crop for seed makers such as DuPont, in favor of soybeans. Corn prices have tumbled since their 2012 peak with bin-busting inventories and favorable growing conditions. As of March 1, U.S. stockpiles were 11 percent higher than a year earlier and the most on that date since 1987, the USDA said.

Higher operating profit was reported in the electronics unit, the safety and protection business, and the performance materials unit, which supplies plastic parts to automakers.

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