DuPont Profit Tumbles 14%; It Blames Costs, Weak Euro
Chemical giant DuPont Co. said Wednesday that third-quarter operating earnings fell 14% because of surging raw material costs and the weak euro. It said those same problems could hurt it over the remainder of the year.
DuPont said operating earnings declined to $537 million, or 51 cents a share, from $625 million, or 59 cents, a year earlier. Consolidated revenue was flat at $6.4 billion.
The earnings were in line with the consensus forecast of 51 cents a share, according to First Call/Thomson Financial.
“During the third quarter, DuPont faced one of the most significant economic challenges in decades,” Chief Executive Charles Holliday said.
“By raising prices, improving our productivity and volume, we overcame $200 million of a $250-million after-tax earnings impact from surging raw materials costs and currency.”
But DuPont, based in Wilmington, Del., will likely face similar problems in the fourth quarter. Indeed, the company said Wednesday that the strongest earnings it could expect to achieve for the full year would be $2.85 a share, marking its second warning about future earnings in as many months.
DuPont had warned in September that full-year income would fall short of previous expectations.
Other chemical companies also have struggled in the face of a weak euro and soaring prices for oil and natural gas, which are used as raw materials in the industry.
DuPont’s shares have dropped nearly 35% this year. The stock on Wednesday fell 50 cents to close at $42.63 on the New York Stock Exchange, near a 52-week low of $38.19.
Along with higher energy costs and currency problems, DuPont is also expected to be hit next quarter by lower sales from its pharmaceutical business.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
TECHNOLOGY:
* Electronic Arts Inc., the No. 1 maker of video-game software, said losses narrowed in its fiscal second quarter to $35 million, or 27 cents a share, from $20.1 million, or 15 cents, a year ago, a better performance than the 30-cent loss analysts expected. Revenue declined 35% to $219.9 million as customers delayed game purchases ahead of the introduction of Sony Corp.’s PlayStation 2.
* EMachines Inc. said its third-quarter net loss widened to $6.1 million, or 4 cents a share, from $2.9 million, or 4 cents, as revenue rose 12% to $175 million.
* InfoSpace Inc. said quarterly profit more than tripled to $9.47 million, or 3 cents a share, better than analysts expected, sending its shares up as much as $3.69, or 18%, in after-hours trading. The shares had closed at $20.56, down $1.63, on Nasdaq, before the results were released. InfoSpace, which sells Internet content such as maps and directories to Web site operators, said its revenue surged to $57.7 million from $19.9 million. Analysts had expected a break-even quarter. InfoSpace completed the acquisition of Web site operator Go2Net Inc. just two weeks ago.
* IVillage Inc.’s losses narrowed in the third quarter to $16.2 million, or 55 cents a share, from $24.9 million, or 98 cents, a year ago, as revenue climbed to $20.2 million from $8.7 million. The online women’s network said revenue in the fourth quarter likely will be flat or down 10% from the third quarter because of a slowdown in advertising spending by Internet players.
OTHER INDUSTRIES:
* A.H. Belo Corp.’s profit rose 5.6% to $17.5 million, or 15 cents a share. Sales rose 9% to $390.4 million. Broadcasting revenue rose 13% and publishing revenue grew 7.9%, led by the Press-Enterprise in Riverside and higher ad sales at the Dallas Morning News.
* Anheuser-Busch Cos., the world’s biggest brewer, said earnings grew 11% to $514.5 million, or 56 cents a share, on a 5.4% rise in sales to $3.4 billion.
* Bethlehem Steel Corp. said its third-quarter operating loss narrowed to $27 million, or 28 cents a share, from $89.8 million, or 77 cents, a year ago, matching expectations, as sales edged up to $960.6 million from $958.3 million. The company said that its loss will widen in the fourth quarter because of a glut of steel and falling prices.
* Gabelli Asset Management Inc. said third-quarter earnings climbed 42% to $14.5 million, or 48 cents a share, as assets under management advanced 27%. Revenue was up 34% to $59.2 million.
* Ivax Corp.’s profit surged 82% to $30.7 million, or 19 cents a share, beating expectations of 15 cents, on increased demand for its generic drugs and higher-profit brand-name medicines. Sales grew 12% to $182.4 million.
* Jones Apparel Group Inc. said third-quarter profit rose 16% to $113.5 million, or 94 cents a share, meeting estimates. Sales were up 3.9% to $1.19 billion.
* Kerr-McGee Corp.’s profit climbed 156% in the third quarter to $266 million, or $2.58 a share, topping estimates of $2.33, because of higher oil and natural gas prices and increased sales of titanium dioxide, a whitener. Sales rose 45% to $1.09 billion.
* Norfolk Southern Corp.’s third-quarter profit rose 6% to $53 million, or 14 cents a share, in line with forecasts, on a 1.1% gain in sales to $1.52 billion. The railroad operator cut costs to adjust for rising fuel prices.
* Oxford Health Plans Inc.’s profit almost tripled in the third quarter to $80.6 million, or 81 cents, from $28.3 million, or 34 cents, well beyond analyst forecasts of 57 cents. The health insurer cut administrative expenses and worked with doctors to control medical costs.
* Park Place Entertainment Corp.’s earnings grew 17% to $68 million, or 22 cents a share, a penny higher than estimates, as investments in new properties paid off. The world’s largest casino company said revenue rose 52% to $1.3 billion.
* Reliant Energy Inc. said third-quarter earnings increased 37% to $389 million, or $1.34 a share, as it benefited from high electricity prices in California this summer and strong demand for power in its home city of Houston. Revenue nearly doubled to $9.5 billion. Analysts had revised their expectations to $1.36 after Reliant said on Sept. 27 that it would exceed the estimate then of $1.70.
* Sara Lee Corp.’s fiscal first-quarter earnings fell 1.6% to $254 million, or 29 cents a share, matching expectations. Results were hurt by weak international bakery sales, higher hog costs and the declining value of the euro. Sales rose 5.1% to $4.46 billion.
* Tosco Corp., the largest U.S. independent oil refiner, said its third-quarter earnings rose 20% to $133.6 million, or 87 cents a share, a penny better than expectations, thanks to strong refining margins supported by low national stocks of oil products. Revenue rose 78% to $6.88 billion. Tosco has boosted gasoline output this year by acquiring refineries and was able to sell fuel for more profit in the quarter. In Southern California and Arizona, though, prices at Tosco’s gas pumps didn’t rise enough to cover the higher fuel costs, the company said.
* Wm. Wrigley Jr. Co., the world’s largest chewing-gum company, said third-quarter profit rose 8% to $83.8 million, or 74 cents a share, meeting expectations, on a 5.1% rise in sales to $533.3 million.
* Williams Communications Group Inc. said its third-quarter loss widened to $149.9 million, or 32 cents a share, from $85.9 million, or 22 cents a year earlier, on costs from building a fiber-optic network and higher interest. The company, owned by natural gas pipeline company Williams Cos., said revenue rose 7.1% to $533.8 million on increased usage by both new and returning customers of the long-distance network.
