(Reuters) - Industrial materials maker DuPont (DD.N) forecast current-quarter profit below Wall Street expectations on Thursday as it faces subdued demand from automotive and electronics industries, two key markets hit hardest by the U.S.-China trade war.
Although the United States and China have signed a Phase 1 trade deal, much of the tariffs remain in place. U.S. President Donald Trump’s latest threat to impose high tariffs on imports of cars from the European Union have raised new concerns.
Shares of the company fell 5% in early trading.
Sales in DuPont’s transportation and industrial (T&I) business fell 9%, primarily due to lower prices for nylon, a stiff plastic used in making auto parts and industrial equipment.
While overall organic prices rose 1% in the fourth quarter, a 3% drop in volumes more than offset the gain. Net sales fell about 5% to $5.2 billion.
The company’s nylon business has been particularly weighed down by the challenging macroeconomic environment that has led to competitors selling at lower prices and retail customers scaling back on inventory.
“We have to move price a little closer to where the competitors are in order to continue to be requalified for future applications,” Chief Executive Officer Marc Doyle said in response to a question about nylon pricing.
DuPont forecast first-quarter net sales to be down mid-single digits. It expects first-quarter profit of between 70 and 74 cents per share, well below analysts’ estimate of $1.01, according to IBES data from Refinitiv.
Full-year profit forecast of $3.70 to $3.90 per share also fell short of the $4.11 estimate.
The company has been cutting costs aggressively and said it would cut spending further this year and look for more options to consolidate its “asset footprint”.
DuPont, earlier a part of the conglomerate DowDupont until it split in three, last month divested its nutrition and biosciences unit to International Flavors & Frangrances (IFF.N).
Overall cost of sales fell 6.4% in the fourth quarter, benefiting from cuts in its selling, general and administrative expenses.
Adjusted profit of 95 cents per share was in line with analysts’ estimates.
Reporting by Taru Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D'Silva