DuPont Slashes Earnings Estimate
Chemical giant DuPont Co. on Monday sharply curtailed its earnings estimate for the second quarter, blaming a global economic slowdown and a strong dollar.
The company now estimates earnings for the second quarter will come in between 35 cents and 45 cents, down from 90 cents in the year-earlier quarter.
Wall Street was expecting earnings of 53 cents, according to First Call/Thomson Financial.
“The downturn has been so widespread across the manufacturing sector that it is impacting essentially all our sectors at the moment,” DuPont Chief Financial Officer Gary Pfeiffer said Monday.
“This is as bad an economic downturn as anyone has seen since 1991. Depending on where you sit in the food chain, it might be the worst economic environment in 30 years.”
Analysts had few immediate comments as they began reviewing the revised earnings estimate.
“They’re not doing so well,” said William Young at Credit Suisse First Boston.
Andrew Rosenfield of Prudential said he suspects some of the downside can be attributed to DuPont’s chemical unit.
“I want to find out what they have to say,” he said. “It’s not like things aren’t bad out there.”
Last week, Dow Chemical Co. also lowered its earnings expectations for the second quarter, saying it no longer expected to meet an estimate of 35 cents to 45 cents.
DuPont will release its second-quarter earnings July 25. The company’s shares closed off 12 cents at $48.12 on the New York Stock Exchange before the announcement.
DuPont’s European operations have fared the worst recently, Pfeiffer said. About a quarter of the company’s sales are in Europe, where polymers, performance coatings, Lycra and crop protection are key units.
“I think what we’re seeing in this quarter is that the U.S. manufacturing downturn that has been with us for the past 3 1/2 quarters, that contagion has spread to Europe . . . perhaps faster than people expected,” Pfeiffer said.
Meanwhile, a weaker Japanese yen affected earnings in the Asia-Pacific region, and Japan accounts for about 40% of DuPont’s sales.
The nation’s No. 1 chemical company has taken several steps this year to offset the slow economy and boost its bottom line, including reducing production in some units, selling others and cutting about 4,000 jobs.
