DuPont Plans $4B Share Buyback


DuPont (NYSE:DD), under pressure from activist investor Nelson Peltz to improve shareholder returns, said it plans to buy back up to $4 billion of its stock using a dividend expected from a spinoff of its performance chemicals business.

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The chemical company also forecast 2015 operating earnings of $4-$4.20 per share, including its performance chemicals unit, below the average analyst estimate of $4.46 per share, according to Thomson Reuters I/B/E/S.

DuPont, which generates 60 percent of its sales outside the United States, said a strengthening dollar had hurt its full-year forecast by 60 cents per share.

Shares of the company, which reported a fourth-quarter profit in line with the average analyst estimate, fell 2.5 percent to $72.25 before the bell on Tuesday.

DuPont also raised its cost-reduction target by $300 million to at least $1.3 billion, which it expects to achieve by 2017.

The company said it could hit its $1 billion cost-savings goal by the end of the year, ahead of its earlier schedule of 2019.

Peltz, who has called repeatedly for DuPont to split itself up, has said the company can cut as much as $4 billion in costs.

Peltz nominated himself and three other members of his Trian Fund Management LP, which owns about 2.7 percent of DuPont, to the board this month.

DuPont last year bought back $2 billion of its $5 billion share repurchase plan.

The company is yet to decide whether the new $4 billion buyback plan will be in addition to its existing program, a source close to the company told Reuters.

The share repurchases announced on Tuesday will be made over 12 to 18 months following the spin off of the performance chemicals unit, named Chemours Co, DuPont said.

Besides the spin off, Trian wants DuPont to separate its agriculture, nutrition and bio-sciences businesses from its slower-growing Kevlar body armor, Tyvek construction materials and other chemical divisions.

But DuPont has repeatedly highlighted the "competitive advantages" in keeping its units together.

DuPont's fourth-quarter operating earnings were 71 cents per share. Net sales fell 5 percent to $7.38 billion, missing the average analyst estimate of $7.80 billion.

Up to Monday's close of $74.11, DuPont's shares had risen nearly 24 percent in the past 12 months on the New York Stock Exchange.

(Reporting by Swetha Gopinath in Bengaluru; Editing by Sriraj Kalluvila)