DuPont to cut 1,500 jobs as economy worsens

EnergyReuters

DuPont slashed its annual forecast, reported a lower-than-expected quarterly profit and announced 1,500 job cuts on Tuesday, bleak signs that demand for the chemical company's lucrative paint and solar products is slipping around the world.

Shares of DuPont, a member of the Dow Jones industrial average, fell nearly 7 percent in premarket trading.

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The job cuts by the company, which also makes Kevlar bulletproof fiber and Corian countertops, marks one of the more extreme reactions to slipping demand and global economic uncertainty so far in this earnings season.

DuPont's sales fell 9 percent to $7.4 billion in the third quarter, while analysts on average had expected $8.15 billion.

Demand fell most sharply in Asia and Europe, hurt by higher prices for titanium dioxide, a key pigment used to make paint and a market DuPont dominates, and pastes used to make solar panels.

Trying to reassure Wall Street, DuPont Chief Executive Officer Ellen Kullman said executives were "addressing these challenges now to position ourselves for improved performance."

The company posted net income of $10 million, or a penny per share, compared with $452 million, or 48 cents per share, a year earlier.

Excluding one-time items, DuPont earned 32 cents per share, while analysts on average had expected 46 cents, according to Thomson Reuters I/B/E/S.

The company plans to lay off 1,500 employees around the world, about 2 percent of its 70,000-person workforce.

Roughly half of the layoffs are due to the weak economy, and DuPont took a one-time charge of $242 million to pay out severance to workers.

The other half of the layoffs are connected to DuPont's August sale of its slow-growing car paint business to investment firm Carlyle Group LP for $4.9 billion.

Carlyle did not need some legal, human resource and other support staff previously used by DuPont to manage the car paint business. DuPont took a $152 million charge in the third quarter for its plan to lay off some of those employees.

DuPont cut its 2012 profit outlook to a range of $3.25 to $3.30 per share, below the $3.93 that Wall Street has forecast.

The company had expected to earn the equivalent of at least $3.79 per share for the year. Its previous forecast of at least $4.20, issued before the deal to sell the car paint business, included that unit's expected profit of at least 41 cents.

Shares of DuPont were down 6.6 percent at $46.49 in trading before the market opened.