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Dow-30 Earnings: DuPont - First Quarter 2013
Diversified chemicals manufacturer and Dow-30 component DuPont (DD – Free DuPont Stock Report) has reported first-quarter results. The company posted sales of $10.4 billion, an advance of roughly 2% thanks to growth in volumes. A modest increase in local prices was offset by a slightly negative currency impact. DuPont posted earnings per share from continuing operations of $1.47, slightly lower than the year-earlier figure. Excluding significant items and pension costs, operating earnings of $1.56 per share declined roughly 5% from the prior-year tally. Investors appeared generally pleased with the results, however, and the stock rose moderately on the news.
The Agriculture line posted strong growth in sales and operating earnings, driven by greater volumes (especially in the Americas) and higher pricing from new seed and crop protection products. Meanwhile, the Performance Materials line benefited from higher sales volumes in packaging markets and lower feedstock costs, though this was partly offset by weak demand in the European automotive sector and further softness in the industrial and electronic markets. Elsewhere, the Performance Chemicals business reported lower sales and a considerable decrease in operating earnings, due to a substantial price decline in the titanium dioxide market and weak demand for fluoropolymers. Moreover, the Electronics & Communications line experienced lower sales in photovoltaic markets.
Some weakness will likely persist in the near term, especially in the Performance Chemicals segment. Indeed, the bottom line ought to remain unimpressive in the second quarter. As a diversified manufacturer of chemicals, DuPont is subject to global economic vagaries. We do expect improvement in the back half of the year, assuming agricultural markets remain strong and industrial demand improves. Overall, we look for revenues and operating earnings per share of $36.5 billion and $3.90, respectively, for full-year 2013.
DuPont is well positioned in its markets and ought to benefit from global economic growth over the long term. The stock earns excellent marks for Safety and Price Stability, and the company has a high Financial Strength rating. Moreover, the Board of Directors has announced a 5% dividend increase, beginning with the June payout. All things considered, this equity appears to have good risk-adjusted total return potential for the coming years, considering its healthy dividend yield.
About The Company:DuPont is engaged in science and technology in a range of disciplines, including high performance materials, electronics, safety and security, and biotechnology. The company operates on a global scale, manufacturing a wide range of products for distribution and sale to many different markets, including automotive, construction, agricultural, medical, protective apparel, electronics and nutrition.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.