DuPont Unveils Upbeat Forecast

DuPont presented its strategy for robust growth in 2012 and beyond at its annual investor day last week. CEO Ellen J. Kullman told analysts that the company has set its sights on sales increases of 7% per year and growth in earnings per share of 12%.

In the near term, however, demand for some DuPont industrial products is soft. Kullman acknowledged weakening in consumer electronics and construction as well as destocking in polymers, factors that led the firm to reduce earnings expectations for 2011. Overall, DuPont expects earnings per share in 2011 to reach $3.87 to $3.95, down 10 cents from its previous estimate.

Still, Kullman was optimistic about next year. “While we see a combination of market pressure and customer destocking in certain markets, we expect it to be short-lived, and there will be restocking in 2012 with slow sequential growth to follow,” she predicted.

Meanwhile, DuPont reported that its seed, nutrition and health, and industrial biosciences businesses are growing rapidly, owing to the May acquisition of enzyme and food ingredient firm Danisco and other deals. The company said it will realize $130 million in cost synergies from the Danisco transaction in 2012, a year earlier than promised.

DuPont expects overall sales in 2012 to reach $40 billion to $42 billion, compared with about $38 billion in 2011. It predicts earnings per share will be between $4.20 and $4.40.

Kullman identified Danisco, and its integration into DuPont’s nutrition and industrial biosciences segments, as the cause of the anticipated higher profits.

On the industrial side, she discussed DuPont’s strategy to aggressively expand production of titanium dioxide, while assuring the audience that the commodity business will not dilute earnings growth.

DuPont’s 2012 outlook is better than expected, said Laurence Alexander, chemicals stock analyst for Jefferies & Co. The talk of corporate transformation “appears to open the door for more mergers and acquisitions in agriculture productivity, animal nutrition, and industrial biotech,” he wrote in a note to investors.

Analysts in attendance probed for information about possible divestiture plans. Kullman bristled that some media outlets have reported on a possible sale of DuPont’s coatings business. She called the reports irresponsible and added that “time will tell about any part of our portfolio and where it sits.”