DuPont (DD) disclosed a 12% contraction in second-quarter profits on Tuesday as the chemicals giant suffered a deeper-than-expected sales drop, prompting management to reveal plans to try to sell its performance-chemicals arm.

Shares of the blue-chip company rallied almost 5% on the latest news, including management’s decision to stand by its full-year earnings forecast and announce a leadership shake-up.

DuPont said it earned $1.03 billion, or $1.11 a share, last quarter, compared with a profit of $1.17 billion, or $1.23 a share, a year earlier.

Excluding one-time items, it earned $1.28 a share, exceeding estimates by a penny.

Sales slipped 0.7% to $9.84 billion, trailing consensus calls from analysts for $10 billion. Volumes were up 1%. Gross margins dropped to 38.5% from 41.1%.

Despite concerns about global growth, DuPont said it continues to expect non-GAAP EPS of $3.85 in 2012, which is ahead of the Street’s view of $3.80.

Meanwhile, DuPont announced it is exploring “strategic alternatives” for its performance-chemicals business that may include a full or partial separation of the businesses through a spin-off, sale or other transaction.

The businesses under review generated $7.2 billion in 2012 sales and include DuPont’s titanium technologies unit as well as its chemicals and fluoroproducts division.

“We have been carefully weighing the strong cash generation of our performance chemicals businesses against their cyclicality and lower growth profile, as well as where the power of DuPont's integrated science can be differentiated,” CEO Ellen Kullman said in a statement.  

Earlier this year, DuPont, the No. 1 U.S. chemical maker by market value, sold its performance-coatings business.

In another important move, DuPont promoted 29-year veteran James Collins, Jr. to senior vice president in charge of industrial biosciences, performance polymers and packaging and industrial polymers businesses.

The personnel shuffle is designed to “accelerate the execution of” DuPont’s “applied integrated science strategy across its businesses.”

Wall Street cheered the developments, driving shares of Wilmington, Del.-based DuPont 4.72% higher to $59.87 ahead of Tuesday’s opening bell. The rally is likely to allow DuPont to extend its 2013 rally of 27%.

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