NEW YORK – DuPont Co. (DD) posted a quarterly profit Tuesday and stuck by its 2004 earnings forecast even though high energy prices threaten to slow the global economy and demand for some of its chemical products.
The No. 2 U.S. chemicals maker backed its earlier forecast of $2.25 to $2.35 a share.
"A cautious outlook on industrial production, driven home by flat U.S. volumes in the third quarter, will likely limit (the) share price," Deutsche Bank (search) analyst David Begleiter said. DuPont's stock price fell 2 percent Tuesday.
For the third quarter, the company reported net income ofgher volumes in Asia and gains from the sale of its textile unit, compensated for surging energy costs.
Those costs dragged down earnings by 10 cents a share.
"Despite these head winds, we are reaffirming the full year's earnings outlook," said DuPont's Chief Financial Officer Gary Pfeiffer, adding that he expected a number of the company's businesses to show good volume growth, even in the face of slowing industrial production.
Prices of oil and natural gas remain near record highs, forcing up costs for chemical makers, who use the fuels to make products and run plants. The high costs also curb demand from customers, who must absorb the price increases and pay their own high energy bills.
In the year-earlier quarter, DuPont, which makes chemicals used in everything from paints to army helmets, reported a loss of $873 million, or 88 cents a share, when pension and raw material costs hurt results.
Before items, Wilmington, Del.-based DuPont earned 25 cents a share, beating the average analysts' forecast by a penny, according to Reuters Estimates.
Quarterly sales fell 7 percent to $5.7 billion, after the sale of DuPont's carpeting and fabrics business this spring, which accounted for about a quarter of company revenue. Flat volumes in the United States also weighed on sales.
Meanwhile, worldwide volume increased 6 percent, while prices rose 2 percent. The company expects to continue pushing through higher prices, following three consecutive quarters of improvements, it said.
Earnings for Dupont's coatings and color business, which sells automotive finishes and printer ink, were flat. Lower car production and higher energy costs offset the company's price increases.
Meanwhile, profits doubled in performance materials, which sells chemicals for packaging and sporting goods. Strong growth in Asia and high sales prices overcame energy costs.
Farm chemicals and seeds posted a narrower loss versus last year's quarter as higher prices helped mitigate the end of the planting season in North America.
DuPont said its cost-cutting program remains on track for $900 million in reductions by 2005.
The company unveiled the cost-cutting program in late 2003 to combat surging costs for natural gas and oil, which DuPont needs to run plants and make chemicals.
The latest earnings included a gain of $78 million from the sale of DuPont's former carpet and fabrics business, Invista, plus tax benefits. The gains offset a charge of $41 million from a Teflon water contamination suit settled with West Virginia residents last month.
The company's shares fell 79 cents to $41.39 on the New York Stock Exchange (search).
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