DuPont warns of quarterly loss, to cut 2,500 jobs
NEW YORK (Reuters) - DuPont (DD.N) expects to post a fourth-quarter loss and cut 2,500 jobs -- about 4.2 percent of its workforce -- amid steep drops in construction, car sales and consumer spending, the chemical maker said on Thursday.
The slump in the U.S. automotive markets has hurt DuPont badly, as it is one of the largest suppliers of paints to car makers. The company has also been stymied by the collapse in the U.S. housing market, since it supplies coatings, countertops and insulation products used in home building.
The freeze in the global credit markets and a recession in many developed economies have further crimped growth for DuPont and its peers. The companies have also suffered from a sharp slowdown in many emerging regions, which had been driving growth for them in recent quarters.
DuPont said it was targeting cost cuts of $600 million for 2009, up from its previous goal of $200 million.
That improvement is on top of $130 million in cost reductions expected from Thursday's restructuring plan, which will result in a charge of $500 million in the fourth quarter.
"We have taken immediate and aggressive actions to maximize cash flow by reducing cost, working capital and capital expenditures in response to current market challenges," Chief Executive Charles Holliday, said in a statement.
Wilmington, Delaware-based DuPont expects a fourth-quarter loss of 20 cents to 30 cents per share, excluding one-time items, a sharp turnabout from the earnings of 20 cents to 25 cents it had earlier forecast.
Analysts were expecting profit of 23 cents per share for the period, according to Reuters Estimates.
The company said sharply lower sales volumes and the resulting lower plant operating rates forced it to lower its forecast.
DuPont expects fourth-quarter sales to fall at least 15 percent from a year earlier, mainly due to a significant decline in worldwide sales volumes.
For 2009, the company forecast earnings of $2.25 to $2.75 per share, below the current Wall Street outlook of $2.82.
The company said the 2,500 job cuts would occur in businesses that service the automobile and construction markets in Western Europe and the United States.
DuPont is also cutting the jobs of 4,000 contractors by year-end 2008, with additional reductions slated for 2009.
In addition, the company is implementing work schedule reductions at some locations, adjusting production to market conditions and redeploying more than 400 employees to projects aimed at lowering operating costs.
Dow Chemical (DOW.N), the U.S. market leader, has said it would announce a restructuring in the next two weeks, in light of the global collapse in demand for its products.
The company said it expected to cut its capital spending budgets for 2009 and 2010 significantly from 2008.
DuPont said it expected 2009 capital expenditures of $1.6 billion to $1.8 billion, compared with $2 billion for 2008.
The company said it expected its pension expenses to increase by 40 cents to 50 cents a share in 2009.
DuPont forecast pretax cost savings of about $730 million in 2009 from the cost-cutting measures and its restructuring plan.
Shares of DuPont rose 41 cents, or 1.7 percent, to $24.02 in morning New York Stock Exchange trade.
(Reporting by Euan Rocha and Matt Daily; Editing by Dave Zimmerman, Derek Caney and Lisa Von Ahn)
- Malaysia jet sent 'pings' after going missing, sources say |
- Russia holds war games near Ukraine; Merkel warns of catastrophe |
- New York City gas explosion subject of federal probe |
- White House tried to mediate dispute between Senate, CIA panel: source
- Missing jet may have strayed to west, Malaysia military says |