DuPont profit inches up 4 pct, raises dividend


Chemicals maker DuPont forecast lower-than-expected operating earnings for the current quarter and warned of a loss in its agriculture unit as weak farm sales constrain both profit and revenue.

DuPont has made a big push into agriculture, energy and specialty materials to insulate itself from more volatile businesses. The farm unit accounts for more than a third of the company's sales.

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But that has cost the company in the last two quarters. Farmers in North America switched to soybean from corn, a crop Dupont is more exposed to, after delaying purchases earlier this year due to an unusually harsh winter.

Corn seeds accounted for about half of DuPont's agriculture sales in 2013, while soybean made up 14 percent.

DuPont forecast operating earnings of $1.25-$1.35 per share for the second half of the year, and said it expected to realize 40 percent of those earnings in the third quarter.

That works out to 50-54 cents per share. Analysts on average were expecting 60 cents per share, according to Thomson Reuters I/B/E/S.

"The third-quarter outlook shows continued headwinds in the agricultural sector," said Suntrust Robinson Humphrey analyst James Sheehan.

DuPont, the maker of Pioneer genetically modified corn and soybean, reported second-quarter revenue below Wall Street's expectations on Tuesday.

The company said it expects "a similar third-quarter loss as the prior year" at its agriculture unit. The unit posted an operating loss of $62 million in the third quarter of 2013, the last the unit lost money.

Second-quarter operating earnings in DuPont's agriculture unit fell 11 percent to $836 million in the second quarter, hurt by weak corn seed and herbicide sales and higher seed inventory write-downs.

Monsanto Co, the world's largest seed company, reported a 6 percent drop in quarterly profit last month due to weak corn sales and higher costs. [ID: nL2N0P60HE]

DuPont, founded in 1802 to make gunpowder, is now the second-largest seed maker after Monsanto, thanks to a transformation that began in 2009.

DuPont said last month that it plans to generate at least $1 billion from cost-cuts by the end of 2019 as it aligns its structure with a planned spin-off of its performance chemicals unit in 2015.

Operating earnings at the unit, which makes refrigerants and a white pigment used in toothpastes, sunscreens and other products, fell 6 percent in the quarter.

DuPont announced the spin-off after Nelson Peltz's Trian Fund Management disclosed a stake in the company last year. Peltz, who holds less than a 1 percent stake in DuPont as per regulatory filings, has called the company's stock undervalued.

DuPont, which set a $5 billion share buyback program earlier this year, raised its quarterly dividend by 2 cents to 47 cents per share on Tuesday.

Net income attributable to DuPont rose 4 percent to $1.07 billion, or $1.15 per share. Operating earnings were $1.17 per share - in line with the average analyst estimate.

Net sales slipped about 1 percent to $9.71 billion, missing the average analyst estimate of $9.79 billion.

DuPont shares closed at $65.54 on Monday on the New York Stock Exchange.