DuPont Interim CEO Vows to Tackle Costs After Drop in Profitby
`We are not pleased with our results this quarter' CFO says
Former CEO Ellen Kullman stepped down earlier this month
DuPont Co.’s Ed Breen, who took over as chief executive officer on an interim basis earlier this month after the abrupt resignation of his predecessor, said the chemical company will take a “fresh look” at its costs after a slump in third-quarter earnings.
“Amid the current challenging macro environment, our priority is to aggressively manage what is within our control, including taking a fresh look at DuPont’s cost structure and capital allocation strategy to identify ways to further improve shareholder return,” Breen said Tuesday in the Wilmington, Delaware-based company’s third-quarter earnings statement.
Net income fell to 26 cents a share in the period from 47 cents a year earlier, the Wilmington. Profit excluding some items was 13 cents, beating the 10-cent average estimate of 16 analysts surveyed by Bloomberg. Revenue dropped 17 percent to $4.87 billion mostly due to currency exchange and lower sales volumes. The average estimate was for $5.27 billion.
“We are not pleased with our results this quarter,” Chief Financial Officer Nick Fanandakis said in the statement. Earnings were hurt by a strong dollar and market weakness in agriculture, emerging-markets, and the oil and gas industry, he said.
The shares dropped 0.5 percent to $60.05 at 8:34 a.m. before the start of regular trading in New York.
DuPont’s agriculture business, its largest segment by revenue, is coming under pressure amid weaker commodity markets and because of the strength of the dollar. Similar dynamics led DuPont competitors Monsanto Co., Syngenta AG and FMC Corp. to reduce their profit projections.
“The weak real and tight credit have led to cautious purchasing of ag inputs by Brazilian growers,” Don Carson, a New York-based analyst at Susquehanna Financial Group LLLP, said in a note last week. “Most of the decline in DuPont’s Brazilian ag volumes is occurring in crop-protection chemicals” due to low insect infestations last year, he said.
Breen took over as interim CEO on Oct. 16, less than two weeks after former chief Ellen Kullman cut the company’s quarterly and full-year profit forecasts and announced her retirement. Prior to Kullman’s departure, DuPont had already planned to reduce annual expenses by $1.3 billion this year and by an additional $300 million next year.
Kullman’s decision to leave was mutual and was prompted in part by her own disappointment with DuPont’s earnings, a person familiar with the matter said earlier this month. DuPont is looking for a successor from outside the ranks of its senior management or the founding Du Pont family, a person with knowledge of the matter said last week. Such a move would be a first for the 213-year-old company and may be welcomed by Trian Fund Management, the activist investor that has a $1.48 billion stake in DuPont.