* Sees agriculture business posting fourth-quarter profit
* Performance chemicals business lags
* Urgently reviewing options for pigments unit-CEO
* Third-quarter operating earnings $0.45/shr vs est $0.41
* Shares up more than 1 percent
By Swetha Gopinath and Garima Goel
Oct 22 DuPont, the largest U.S. chemical
maker by market value, said it expects earnings to more than
double this quarter as its fast-growing agriculture business
overcomes traditional seasonal weakness.
The company said it expects the business, which supplies
farmers with seeds, pesticides and fertilizers, to report a
small profit this quarter, its first positive fourth quarter in
"The story is going to be all about agriculture," said Piper
Jaffray analyst Mike Ritzenthaler.
The first half of the year is typically stronger for
DuPont's agriculture business as farmers tend to buy seeds and
pesticides for the spring planting season in the northern
DuPont said its fourth quarter is being helped by early
shipments of seeds to North American farmers and strong demand
in Latin America, where the planting season has just begun.
The growth in DuPont's solar panel parts and Kevlar body
armor businesses, which helped it post a higher-than-expected
profit in the third quarter, is also expected to continue.
Sales of a metal paste used in solar products rose 42
percent, while sales of Kevlar fiber, used in bullet-proof vests
and made famous in Batman comics, shot up 70 percent.
However, sales at its performance chemicals unit, which
houses its paint pigment business, fell in the quarter and is
expected to continue to lag as high raw material costs and
volatile prices more than offset higher sales volumes.
Under Chief Executive Ellen Kullman, DuPont is focusing on
agriculture, alternative energy and specialty materials to
offset its weak paint pigments business for which it is
Kullman said the company was "moving with a sense of
urgency" with regard to its performance chemicals business.
The company had made significant progress and was looking at
a lot of different options, Kullman said, but declined to give
details in a media interview.
"We would be shocked if we get to year-end without some
announcement," said Jack Murphy, a portfolio manager at hedge
fund Levin Capital Strategies that owns 0.3 percent of DuPont's
PAINT PIGMENTS SALE?
"Kullman's movement to 'right the ship' continues on track.
And, given activist shareholder Nelson Peltz's ownership stake,
I suspect we'll continue to see ... focus on higher growth and
higher valuation metrics," said Eric Linser of Avant-Garde
Advisors, a wealth management firm that owns DuPont shares.
Nelson Peltz's Trian Fund Management LP disclosed a stake of
5.78 million shares in DuPont in August, which fueled
speculation that the company could be forced to exit the paint
"Removing the business from the portfolio is going to cause
an upward shift in valuation," Murphy said, adding that the
stock could trade in the high $60s if the paint business were to
be hived off.
Shares of DuPont, a component of the Dow Jones industrial
average, were up more than one percent at $60.28 in Tuesday
morning trade on the New York Stock Exchange.
Wilmington, Delaware-based DuPont's total net income rose to
$285 million in the third quarter ended Sept. 30, from $5
million a year earlier, when the company recorded charges
related to severance and restructuring.
Operating earnings were 45 cents per share. On that basis,
analysts on average had expected 41 cents per share, according
to Thomson Reuters I/B/E/S.
Revenue rose 5 percent to $7.74 billion, but fell slightly
shy of analysts' estimates of $7.78 billion.