DuPont cites weak quarterly revenue, says it will cut 1,500 jobs

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DuPont plans to sell its auto-paint business. It also cited weak sales in Asia. DuPont's chief executive officer and chairman said cutbacks "are impacting Delaware."

Warning of weak demand in two product areas and in Asia, chemical giant DuPont reported Tuesday that third-quarter revenue from continuing operations fell 9 percent and that it would eliminate 2 percent of its employees, or 1,500 workers, to trim $450 million in costs.

The 70,000-employee Wilmington company did not provide details on which global offices or divisions faced cutbacks, though in a media conference call Ellen Kullman, DuPont's chief executive officer and chairman, said, "They are impacting Delaware."

The disappointing DuPont earnings report contributed to a broad sell-off on Wall Street, with investors edgy because of concerns about the global economy, the leadership transition in China, the fiscal cliff, and the presidential election.

Analysts said that DuPont's news came as a surprise and that shares in it and other chemical companies - among them Dow Chemical Co. and FMC Corp., which also have significant local operations - slumped on the uncertainty. DuPont shares tanked 9.1 percent, or $4.53, to close at $45.23.

Revenue fell to $7.4 billion in the third quarter from $8.1 billion in the year-ago period, and net income plunged to $10 million from $452 million.

Income from continuing operations after adjustments for onetime charges - which gives the clearest view of the company's performance - was $302 million in the third quarter of 2012, compared with $579 million in the year-ago period.

Earnings were reduced in third-quarter 2012 by a $242 million impairment charge in the electronics and communications segment and the performance-materials business.

"Clearly, this was a challenging quarter for DuPont," Kullman said. The weak quarter did not indicate a deeper problem in its businesses, she said, and could be attributed mostly to titanium oxide, a white pigment for paints, and photovoltaics.

DuPont has been transforming its portfolio of businesses for years by selling traditional chemical lines and expanding into agriculture seeds, nutrition and safety. The company has a deal to sell its auto-paint business to Carlyle Group L.P. for $4.9 billion.

Part of the employee cutback will be associated with streamlining corporate offices in connection with the divestiture of the auto-paint business.

Michael Ritzenthaler, chemicals analyst with Piper Jaffray Cos., said DuPont's outlook for the fourth-quarter was significantly below expectations on Wall Street.

"In general, we are seeing very soft construction markets in Asia," he said.

Jeff Windau, industrials analyst with Edward Jones, said that the company's leadership seems to be moving quickly to adjust to the business conditions.

 


Contact Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.