* Expects to cut workforce in low single digits on
* Warns of loss in agriculture unit in third quarter
* Operating earnings at unit down 11 pct in second quarter
* Second-quarter net sales $9.71 bln vs est $9.79 bln
* Raises dividend to $0.47/shr from $0.45/shr
(Adds details on job cuts)
By Swetha Gopinath and Kanika Sikka
July 22 DuPont, the world's
second-largest seed maker, said its agriculture business would
not improve in the current quarter as it struggles to cope with
farmers' preference for soybean rather than corn, the mainstay
of the business.
The company, whose stock closed down nearly 1 percent on
Tuesday, said it expects the agriculture unit to post "a similar
third-quarter loss as the prior year", which was the last
quarter the unit lost money.
DuPont, which employs about 60,000 people, also plans to cut
its global workforce in the "low single digits" in percentage
terms, company spokesman Dan Turner said in an email. He did not
specify a timeframe for the job cuts.
DuPont, founded in 1802 to make gunpowder, now gets more
than a third of its sales from the farm business after pushing
into agriculture, energy and specialty materials to insulate
itself from volatile businesses such as performance chemicals.
But that push has cost the company, as it did No.1 seed
maker Monsanto Co, as farmers in North America switched
to soybean from corn in the spring planting season after
delaying purchases earlier this year due to an unusually harsh
Soybean made up 14 percent of DuPont's 2013 farm sales.
The low demand for corn seeds, which accounted for about half of
DuPont's farm sales in 2013, led to weaker-than-expected revenue
in the company's second quarter ended June 30.
"If the current supply dynamics persist and corn planted
area remains under pressure, it will temper short-term growth
rates for the agriculture segment, particularly in our seed
business," James Borel, who oversees DuPont's farm business,
said on a post-earnings call.
FARM FOCUS FIZZLES
The company's second-quarter operating earnings in the
agriculture unit fell 11 percent to $836 million.
DuPont said it expects a third-quarter loss "similar" to the
$62 million it reported a year earlier in the farm business.
The July-to-September quarter is seasonally weak for seed
makers as it is harvesting season in the northern hemisphere and
spring planting in the southern hemisphere is yet to begin.
DuPont's forecast for the second half of the year implies a
company-wide operating profit of 50-54 cents per share in the
third quarter, lower than the 60 cents analysts on average are
However, that means earnings would handily beat estimates in
the fourth quarter. But analysts and investors shrugged it off.
"The strength in the fourth quarter may be earlier seed
sales that might have otherwise occurred in early 2015, so I
would say this is relatively disappointing," said UBS analyst
DuPont, however, expects a rise in third-quarter operating
earnings at four of its five other businesses, including at the
volatile performance chemicals unit, which is on-track to be
spun off next year.
Chief Executive Ellen Kullman said the company was
evaluating acquisitions as it looked ahead to the separation of
the unit that makes white pigments and teflon coatings.
DuPont announced the spin-off last year after Nelson Peltz
disclosed a stake in the company.
Peltz, who holds less than a 1 percent stake, told CNBC last
week that he wants DuPont to simplify its businesses and that he
would know by the end of the summer if his talks with the
company had been "constructive" or not.
DuPont also raised its quarterly dividend by 2 cents to 47
cents per share.
The company's shares closed at $64.95 on Tuesday.
(Additional reporting by Anannya Pramanick; Editing by Savio
D'Souza and Saumyadeb Chakrabarty)