DuPont reports 4Q and Full-Year 2012 results; expects modest growth in 2013 operating earnings

Reporting 4Q and full-year 2012 results, DuPont Chair and CEO Ellen Kullman said: “DuPont stands stronger today than it did a year ago. Our segments delivered innovation, productivity and integration cost synergies. This, coupled with a record year in new product introductions, has strengthened our market position.”

Fourth quarter 2012 earnings per share (EPS) from continuing operations, excluding significant items, was USD .11 versus prior year earnings of USD .26. Reported fourth quarter 2012 EPS from continuing operations was USD .02 versus USD .31 in the prior year.
Sales of USD 7.3 billion equalled the prior year. Three per cent higher volume was offset by 2% negative currency impact and a 1% reduction from portfolio changes.
Segment pre-tax operating income (PTOI) was down, primarily reflecting lower price and volume in Performance Chemicals. Titanium dioxide pricing led the decline.
2012 EPS from continuing operations, excluding significant items, was USD 3.33 versus USD 3.55 in 2011. Currency was a USD .27 per share headwind for the year. Reported EPS from continuing operations was USD 2.61 versus USD 3.30 in 2011.
Sales were USD 34.8 billion, up 3% with a 6% increase in developing markets.
Segment PTOI increased 3% to USD 5.7 billion, excluding Pharmaceuticals and significant items.
Agriculture PTOI increased 18% driven by volume and pricing growth for seed and crop protection businesses in North America and Latin America. Performance Chemicals PTOI decreased 16% from lower sales across the segment.
Free cash flow was USD 3.1 billion versus USD 3.3 billion in the prior year. 2012 includes a USD 0.5 billion contribution to the principal US pension plan and lower net income, partly offset by improved working capital productivity.
Fixed cost and working capital productivity benefits were each about USD 400 million, surpassing their USD 300 million targets.
Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were USD 3.77 per share. On the same basis, the 2013 outlook for operating earnings is USD 3.85 to USD 4.05 per share, an increase of 2 to 7% over the prior year.
“DuPont stands stronger today than it did a year ago. Our segments delivered innovation, productivity and integration cost synergies. This, coupled with a record year in new product introductions, has strengthened our market position,” said DuPont Chair and CEO Ellen Kullman. “However, weakness in markets served by Performance Chemicals and Electronics & Communications provided significant challenges in 2012. We’ve adjusted our plans to meet the changing market environment and grow our businesses in a slow-growth world economy.”
Fourth quarter 2012 sales were USD 7.3 billion, flat versus the prior year. Currency impact and portfolio changes offset 3% volume growth. Volume was driven by Agriculture, with robust sales in Latin America and a strong start to the North American selling season, and increases in Asia Pacific for Performance Materials, Electronics & Communications and Performance Chemicals.
Full-year 2012 sales were USD 34.8 billion, up 3% versus 2011, reflecting 4% higher local prices, 2% adverse currency impact, 2% lower volume, and a 3% net increase from portfolio changes. Local prices increased for all segments except Electronics & Communications, which had lower pass-through of metals prices.
Lower global volume principally reflects decreases for Performance Chemicals and Electronics & Communications, partly offset by higher Agriculture volumes.
Excluding significant items, fourth quarter 2012 income from continuing operations was USD 110 million versus USD 246 million in the prior year. The decrease principally reflects lower income from Performance Chemicals and Pharmaceuticals, increased spending for growth initiatives and adverse currency impact. Reported fourth quarter 2012 income from continuing operations was USD 19 million versus USD 293 million in the fourth quarter 2011.
Agriculture – Sales of USD 1.5 billion were up 18% on 11% higher volume and 7% higher prices despite the negative impact of currency. PTOI seasonal loss of (USD 92) million improved USD 24 million on higher volume in Latin America and stronger than expected pricing gains, partially offset by continued investment in commercial and R&D activities.
Full-year sales of USD 10.4 billion grew 14% on 8% higher volume and 6% higher prices. Pioneer seed sales increased from higher global volume and pricing gains in corn and soybeans. Crop Protection sales grew on strong demand for insecticides and herbicides in all regions. Full-year PTOI increased 18% as strong sales more than offset unfavourable currency and higher investments in commercial and R&D activities to support growth.
Electronics & Communications – Sales of USD 622 million were down 1%, with 2% higher volume offset by 3% lower prices, primarily pass-through of lower metals prices. Volume growth from increased demand for materials in smart phones and tablets was partly offset by continued softness in photovoltaic materials. PTOI declined USD 18 million as the prior year included OLED technology licensing income of USD 20 million.
Industrial Biosciences – Sales of USD 300 million were up 4% on 3% higher volume and 1% higher prices.
Volume growth reflects strong sales of Sorona® polymer for carpeting, and continued growth in food enzymes in Europe.
PTOI of USD 44 million was up USD 10 million on higher volume and the benefit of synergies realized from the integration of the Danisco enzyme business.
Nutrition & Health – Sales of USD 853 million were up 6% on 3% higher volume and 3% higher prices.
Volume growth reflects strong demand for probiotics, cultures and enablers. Higher local prices in all regions were partly offset by unfavourable currency. PTOI of USD 66 million was up USD 14 million on higher sales and the benefit of synergies realized from the integration of the Danisco speciality food ingredients business, partly offset by higher raw material costs.
Performance Chemicals – Sales of USD 1.6 billion were down 15%, with 8% lower volume and 7% lower prices. Lower volume resulted primarily from weak demand for fluoropolymers in US and Europe. Lower prices reflect cyclical pressure in the titanium dioxide market. PTOI of USD 200 million decreased USD 233 million on lower sales and plant utilization in both businesses.
Performance Materials – Sales of USD 1.5 billion were down 5%, with 5% lower prices and a 3% reduction from a portfolio change, partly offset by 3% higher volume. Stable packaging markets and strong demand in the North American automotive market were partially offset by softness in the industrial and electronics markets and a weak Europe. PTOI of USD 254 million increased USD 103 million due to lower feedstock costs, higher volume and mix enrichment, partly offset by unfavourable currency.
Safety & Protection – Sales of USD 964 million were up 2% on 3% higher volume, partly offset by 1% lower prices due to unfavourable currency. Volume increased on higher demand for Sustainable Solutions offerings and US residential and commercial construction products. PTOI of USD 88 million decreased USD 6 million primarily due to lower plant utilization related to softness in certain industrial markets and US public sector markets.
Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were USD 3.77 per share. On the same basis, the 2013 outlook for operating earnings is USD 3.85 to USD 4.05 per share, an increase of 2 to 7% over the prior year. First half 2013 operating earnings are expected to decline modestly on a year-over-year basis. Additionally, full-year 2013 sales are expected to be about USD 36 billion.