DuPont shares jump as cost cuts take hold

Shares of DuPont Co. topped $67 this morning for the first time this year. Investors cheered as the Wilmington-based chemical company reported higher-than-expected profits across the conglomerate, as increased yogurt sales in China helped replace lost sales of pesticides in Brazil. The company is preparing for more cost cuts as it prepares to merge with Dow Chemical Co., then split into three separate firms.

"The company is visibly moving at a faster clip," said chief executive Edward Breen, after abolishing a layer of management, cutting administrative costs by 44%, reducing agricultural-business R&D by 10%, and ending 1,700 jobs in the Wilmington area. He praised DuPont managers for their "desire to win."

More cuts are on the way: DuPont and Dow hope to cut $3 billion in expenses after they merge later this year. Capital spending shoujld drop to $1.1 billion this year, from $1.4 billion last year. Breen said administrative costs still eat up 1.3% of sales; the target for a "world-class" organization, he added, is 1%, citing his "prior life" experience cutting costs at Tyco International and General Instruments before selling them to larger companies.

DuPont boosted operating returns from its Nutrition and Health unit thanks to higher sales of long-shelf-life Greek yogurt in China, soy-based Supro (used in powdered drinks) and other products. But profits from pesticide sales declined as global farm income fell. The company's performance-materials unit also reported a drop in profits due to the collapse in ethylene prices. Breen says he hopes farm sales have bottomed and will strengthen later htis year.