DuPont reports drop in second quarter earnings
DOVER, Del. -- The chemicals giant DuPont reported a nearly 12 percent decline in second-quarter earnings this week partly because of lower pricing for titanium dioxide, a widely used whitening pigment, and said it is exploring a possible sale or spinoff of its performance chemicals unit.
DuPont Co. is a global leader in production of titanium dioxide, or TiO2, but has wrestled for more than a year with sluggish demand for the whitener, which is used in broad range of products from automotive and house paints to toothpaste.
Titanium dioxide is a key part of DuPont's performance chemicals business, but CEO Ellen Kullman noted Tuesday the markets for performance chemicals are cyclical and volatile, and that they have low growth profiles compared to other DuPont products.
"These are strong, healthy businesses <t40>...<t$> but DuPont has always embraced change," she told analysts. "We are always looking around the next corner."
Kullman said no decisions have been made and no timetable set for determining the future of the performance chemicals unit, which generated total sales of $7.2 billion in 2012.
DuPont has plants at Belle in Kanawha County and Washington in Wood County. Dan Turner, spokesman for DuPont's North American operations, said the company employs 2,000 people in West Virginia but would not disclose information regarding the number of those employees who may be affected in performance chemical units.
"It's too early to speculate in regard to any impact on these sites," he said.
Kevin DiGregorio, executive director of the West Virginia Chemical Alliance Zone, said information on DuPont is still preliminary, but companies are always going through the process of deciding what to keep and what to let go.
Even if DuPont sells the company, DiGregorio said that doesn't necessarily mean those jobs will leave the region if someone else moves in.
"Am I nervous? No, but do I want to keep DuPont? Absolutely," he said. "Until those decisions are made, we don't really know."
Meanwhile, the Wilmington, Del.-based company reported net income of $1.03 billion, or $1.11 per share, for the quarter ending June 30, compared with $1.17 billion, or $1.23 per share, for the same period last year. Revenue fell 1 percent to $9.8 billion as lower selling prices and currency effects offset an overall 1 percent volume gain.
Wall Street analysts surveyed by FactSet were expecting higher earnings of $1.27 per share and revenue of $10.04 billion.
DuPont's announcement that it may shed the performance chemicals business appeared to partially offset worries about the financial performance for the quarter.
DuPont's agriculture unit continued to lead the company's overall performance, posting a 7 percent gain in sales on higher prices and a slight increase in volume. The company said agriculture segment sales grew 11 percent in the first six months of the year, driven by seed prices and volume growth in corn seeds, insecticides and fungicides. First half operating earnings are up 8 percent despite higher seed input costs, DuPont said.
"Agriculture sales remained strong in the second quarter and titanium dioxide volume improved," Kullman noted. "As expected, this was largely offset by a substantial decline in performance chemicals earnings from last year's peak levels."
The company's electronics and communications segment saw sales drop 18 percent on both lower prices and volume declines amid weak demand in photovoltaics markets. Gazette staff writer Caitlin Cook contributed to this report.