A DuPont sign atop the company's world headquarters in Wilmington, Del.JEFF FUSCO/GETTY IMAGES
E.I. du Pont de Nemours & Co. expects to beat Wall Street's earnings forecast next year, with strong agricultural and chemical sales offsetting weak shipments to electronic and housing customers.
The bullish talk from chief executive officer Ellen Kullman at the company's investor day comes less than a week after DuPont cut its forecast for the current year. It was the first time Ms. Kullman trimmed the company's forecast since taking the top job in 2009.
Ms. Kullman is betting DuPont's strong agriculture and nutrition products will help buoy the company through the remainder of the economic storm.
DuPont continues to grow in emerging markets, especially in Asia and Latin America, and the United States is performing "better than anybody thought," but "nobody in Europe feels really comfortable right now," Ms. Kullman said.
Some of DuPont's electronics and polymer customers are cutting costs and drawing down their own inventories before replenishing supplies, she said. "Nobody wants to hold inventory," Ms. Kullman said. "I do think it needs to settle out a bit for there to be a little bit of confidence and for restocking to occur."
Other units, particularly agriculture and nutrition, are performing well as a growing world population demands more food, she said.
The company, which also makes Kevlar bulletproof fabric and pigments for paint, said it expects to earn between $4.20 (U.S.) and $4.40 a share next year.
Excluding a 17-cents-per-share expense for pensions, DuPont expects to earn between $4.37 and $4.57 a share in 2012. That compares with Wall Street's estimate of $4.23 a share, according to Thomson Reuters I/B/E/S.
The forecast assumes that global GDP increases by 2 to 3 per cent next year, and that the U.S. dollar will increase in value by 3 per cent compared with a basket of currencies, DuPont said.
The company expects its pension contribution in 2012 to hit $875-million, up from some $320-million this year. The stark jump is due to lower interest rates and higher fund management expenses, the company said.
"For many years we haven't had to make a contribution. The fund itself, its return on assets, was able to fund the pension plan," DuPont chief financial officer Nick Fanandakis said. With the discount rates falling recently and market volatility, "that has resulted in a need for a pension contribution," he said.
Ms. Kullman blasted recent media reports that DuPont is selling its struggling Performance Coatings Inc. unit, which sells paint to car makers and refinishers. The sale of the unit could net DuPont as much as $4-billion, Reuters reported in October.
"I'm quite frankly appalled at the irresponsibility of some media outlets," Ms. Kullman said. Still, she did not deny outright that DuPont has the performance coatings unit up for sale.
"Time will tell about any part of our portfolio and where it sits," she said. "I love all my children until I don't love them. That does bother my own children, but in business it seems to work.
"If something changes, we'll be the first ones to come out and talk to you."
Several private equity firms, including Kohlberg Kravis Roberts & Co., Bain Capital, TPG Capital, and Onex Corp, have made preliminary inquiries about the sale and talked to banks about financing a potential deal, sources have told Reuters.
DuPont expects 2012 revenue of between $40-billion and $42 billion. Analysts expect $41.4 billion.
Reuters