Published on : Oct 29, 2014
DuPont - The Wilmington, Del-based leading chemical company faced decline of three percent sales to $7.5 billion in the quarter ending of September 30. The company’s third-quarter earnings were increased by 52 percent to $433 million albeit the slow global growth and agricultural downside.
The company witnessed the biggest drags from chemical sales with eight percent decline to around $1.7 billion. On the other hand, the agricultural sales fell by four percent to almost $1.6 billion.
Due to low commodity prices and fewer acres of corn seeds planted in Latin America, the quarterly seed sales in DuPont fell by 16 percent. DuPont is the parent company of Pioneer and its agricultural segment faced a loss of $55million in the third quarter, which accounted to be $7 million less than a year earlier. With corn acres and farm income issues constantly under pressure, the company is expected to witness major growth challenges in agriculture this year and the coming year. DuPont now favors plantation of soybeans over corn.
Some of the negative industry factors include strengthening U.S. dollar and rising grain stocks from North America’s harvest. CEO of DuPont said improved operating margins in company’s five of seven sectors chiefly contributed to the company’s overall strong performance.
Ellen Kullman, CEO DuPont said in a conference call that the company has reduced its senior leadership by 20 percent and consolidated around 23 businesses into 12 segments over the past five years. DuPont is also investing into new products and science innovations. The company is implementing into high-performance operating model and other streamlined cost base and decision-making structure. Kullman said DuPont planned to reduce $1 billion in costs by 2019 and $675 million by 2015.
She also added that the company is right on track to spin off its performance chemicals segment by 2015. DuPont has observed constant pressure from Trian Fund Management LP to segment the company into two different companies. One part would consist of health, nutrition, and agriculture and the other would be safety, protection, and performance materials in order to improve the shareholder value. Trian claimed that DuPont had excess amount worth $2 billion to $4 billion in corporate costs and country club, theater, and other hotel expenses in September.
Kullman informed the analysts that since 2008, DuPont has retrieved more than $2 billion in costs and the company is seeking different ideas to maintain its position in a competitive marketplace.
However, DuPont’s total net earnings were 47 cents against 30 cents per share a year earlier. The company’s shares closed at $67.95 higher by 7 cents each in trading earlier on Tuesday.