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Highlights:
• DuPont’s third quarter 2009 earnings were $.45 per share, compared to third quarter 2008 earnings of $.40 per share which included a $.16 per share hurricane-related significant item charge (see Schedule B.)
• Total company sales for third quarter 2009 were $6.0 billion, with sales in emerging markets rebounding from significantly lower levels in the first and second quarters. Pricing discipline contributed to segment pre-tax margins returning to prior year levels.
• Companywide fixed cost reduction and productivity actions boosted third quarter pre-tax earnings by about $300 million. This brings year-to-date program cost reductions to
$900 million versus the company’s full-year goal of $1 billion.
• Raw material, energy and freight costs adjusted for currency and volume were 12 percent lower versus 2008. The company expects these costs for the full year will be about 5 to 6 percent lower than 2008.
• The company revised its full year 2009 earnings outlook to a range of $1.95 to $2.05 per share, excluding significant items. This reflects a narrowing toward the upper end of the company’s previous range of $1.70 to $2.10 per share. The full-year free cash flow outlook remains
$2.5 billion.
“We delivered on our commitment to shareholders, while navigating through some very difficult business conditions,” said DuPont CEO Ellen Kullman. “We see overall sequential improvement in our industrial businesses as market conditions begin to firm. With a more streamlined organization, permanent fixed cost reductions, and increased productivity, DuPont is well-positioned to capitalize as markets improve. We will continue to leverage our market-driven science across the company to deliver products customers want around the world. We are focused on growth and our rigorous operational discipline in order to deliver continued earnings improvement.”
Net Income and Global Consolidated Sales.
Net income attributable to DuPont for the third quarter 2009 was $409 million versus $367 million in the prior year. The prior year included a $146 million after-tax hurricane-related charge.
Net income reflects the benefit of significantly lower costs, partly offset by lower sales volume. Third quarter 2009 consolidated net sales of $6.0 billion were 18 percent lower than prior year, reflecting 12 percent lower volume, 2 percent lower local prices, a 3 percent negative impact from currency exchange rates and a net 1 percent reduction due to portfolio changes. While year-over-year volume declines have slowed, lower sales volume continued to reflect generally weaker economic conditions than prior year. The table below shows regional sales and variances versus third quarter 2008.
Earnings Per Share
The table below shows year-over-year earnings per share (EPS) variances for the third quarter. Earnings principally reflect lower variable and fixed costs, lower sales volume and the impact of the stronger dollar. Capacity utilization has significantly improved versus prior quarters this year.
Business Segment Performance
The table below shows third quarter 2009 segment sales and related variances versus prior year.
Pre-tax operating income (PTOI) of $757 million compares to prior year $682 million, which includes a $227 million hurricane-related significant item charge.
The following is a summary of business results for each of the company’s operating segments, comparing the third quarter 2009 with third quarter 2008, for sales and PTOI. All references to selling price changes are on a U.S. dollar basis, including the impact of currency.
Agriculture & Nutrition
• Sales of $1.2 billion were down 5 percent, reflecting unfavorable currency impact, partly offset by agriculture market share gains and strong seed pricing.
• Seasonal third quarter pre-tax loss was $113 million versus a loss of $21 million in the prior year, which included a $49 million gain on the settlement of soybean contracts. Current quarter earnings reflected continued spending for growth initiatives and higher input costs.
Coatings & Color Technologies
• Sales of $1.5 billion were down 16 percent, primarily reflecting continued weakness in motor vehicle markets.
• PTOI of $182 million was 4 percent lower, reflecting lower sales volumes and unfavorable currency, partly offset by lower variable costs, fixed cost reductions and pricing gains.
Electronic & Communication Technologies
• Sales of $919 million were down 13 percent, reflecting 10 percent lower volume and 3 percent lower selling prices. Weak demand in consumer and general industrial markets offset increased demand in photovoltaics and packaging graphics.
• PTOI of $125 million was down 9 percent, reflecting lower volumes and lower costs.
Performance Materials
• Sales of $1.3 billion were down 24 percent, reflecting weak demand in major markets in all regions, particularly in general industrial and motor vehicle markets.
• PTOI of $230 million was up versus a prior year loss of $91 million, which included hurricane-related charges of $216 million. The improvement also reflected lower cost partly offset by lower sales volume, unfavorable product mix and currency. Current quarter included $24 million of insurance recoveries related to the hurricane.
Safety & Protection
• Sales of $1.0 billion were down 32 percent, reflecting a 22 percent volume decline primarily in industrial and construction markets. Pricing decreases reflected the pass-through of lower chemicals raw material costs.
• PTOI of $93 million principally reflected lower market demand, partly offset by lower raw material costs, fixed cost reductions and pricing actions. Current quarter included a $26 million asset impairment charge.
Additional information on segment performance is available on the DuPont Investor Center website at www.dupont.com.
Outlook
DuPont revised its full-year 2009 earnings outlook to a range of $1.95 to $2.05 per share, excluding significant items. The full-year free cash flow target remains $2.5 billion. The outlook anticipates improving demand across key markets. The company expects lower raw material costs and currency exchange rates will be a benefit to earnings in the fourth quarter versus the prior year. Aggressive actions to reduce costs and capital expenditures will continue as the company maintains an appropriate level of investment for high-growth, high-margin businesses including seed products and photovoltaics.
Use of Non-GAAP Measures
Management believes that certain non-GAAP measurements, such as free cash flow, are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in schedules C and D.
DuPont is a science-based products and services company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; building and construction; communications; and transportation.
Forward-Looking Statements: This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by DuPont, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; seasonality of sales of agricultural products; and severe weather events that cause business interruptions, including plant and power outages, or disruptions in supplier and customer operations. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.
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