DuPont de Nemours Inc DD-N on Tuesday cut the top-end of its annual revenue forecast, citing slower-than-expected recovery in the company’s electronics and industrial markets, sending its shares down about 9 per cent in early trading.
The materials and chemicals maker expects customer utilization in the electronics markets to improve only in the third quarter, compared with the earlier anticipated recovery in the current quarter.
“The quarter we’re in now is the bottom, just slightly down more from the first quarter. There are usually 3 to maximum 4 quarters of a destock. Remember, a lot of this is destock on top of some consumer softness,” CEO Edward Breen said in a post earnings call.
Sales from the electronics and industrial unit fell about 16 per cent in the first quarter. Tepid demand in the electronics segment also dragged down China sales by nearly 20 per cent.
Still, strong performance in its water and protection segment and higher prices helped DuPont beat earnings estimates.
The company has raised prices over the past year to fend off rising costs for raw materials, energy and logistics snags.
“We continue to expect ongoing strength throughout the year in areas such as water, automotive, aerospace and health care,” Chief Financial Officer Lori Koch said.
DuPont cut the top-end of its annual sales forecast to $12.50-billion from $12.90-billion, while retaining the lower end at $12.30-billion.
Separately, the company will buy specialty medical devices maker Spectrum Plastics Group from AEA Investors for $1.75-billion cash.
Healthcare will represent about 10 per cent of total sales with the addition of Spectrum, Breen said.
The acquisition is “an attractive opportunity to grow its exposure in a more stable end market such as health care,” KeyBanc Capital Markets Aleksey Yefremov said, adding the premium is excessive for current market conditions.
DuPont earned 84 cents per share for the March quarter, on an adjusted basis, beating estimates of 80 cents, according to Refinitiv data.