The chemical giant EI DuPont de Nemours & Company (DD) reaffirmed its full year 2011 earnings per share outlook as reported by Chair and CEO Ellen Kullman at the JPMorgan Diversified Industries Conference.
According to Kullman, the company still expects to see EPS in the range of $3.65 to $3.85 per share, excluding the impact of acquisition of Danisco, which, as previously announced, could reduce 2011 earnings by 30 cents- 45 cents per share on a reported basis.
According to DuPont, the acquisition of Danisco fits in well for DuPont and provides a number of growth opportunities especially in the food and energy sector. Danisco’s business portfolio complements that of DuPont’s. Danisco has a strong R&D pipeline, and its specialty food ingredients offer long-term financial returns to DuPont.
The deal is in line with DuPont’s strategy to expand beyond its chemical and manufacturing focus into the mega trend sectors of agri business and alternative energy. Both the industries are expected to grow rapidly in the coming years as food demand and prices increase and clean energy policies gain more ground.
The combination results in a powerful, integrated set of tools to create the next generation of cost-effective bio fuels and bio based materials. Both the companies expect to create differentiated products with excellent environmental profiles and superior economics for its customers.
The company focuses on innovation and productivity and is on track to achieving fixed cost productivity and working capital productivity gains of $1 billion and is also on track to deliver its 2011 targets of $300 million for each.
The company’s businesses are delivering strong results, building on the momentum from 2010 and first quarter 2011. The company reported an increase in profit of $1.43 billion or $1.52 per share in the first quarter of 2011 from $1.13 billion or $1.24 per share in the same quarter of 2010. The profit exceeded the Zacks Consensus Estimate by $0.15 per share.
The improvement in profit is attributable to higher sales in the developing markets and strong volumes, especially in the Safety & Protection, Agriculture & Nutrition and Electronics & Communications segments.
Sales in the quarter grew 18% to $10.0 billion, up from the Zacks Consensus Estimate of $9.3 billion. The increase in sales reflected a 9% rise in sales volume, an 8% increase in local price and 1% net increase from portfolio changes. Sales in the developing markets rose 30%.
DuPont expects its resource investments, coupled with innovative product offerings and market demands aligned with the megatrends, to enrich the company's mix of high-growth, high-value offerings. Based on current expectations for long-term sales growth, the company forecasts high-growth business segments to shift from 48% of the portfolio in 2010 to 57% percent by 2015.
DuPont is a science-based product and services company, ranking sixth in crop protection chemicals and second in seeds. The company continues to execute its strategy of enhancing its offshore reach, expanding its presence in newer chemical technologies and shoring up agricultural operations.
DuPont faces stiff competition from The Dow Chemical Company (DOW) and Ashland Inc.
Currently, DuPont has a short-term (1 to 3 months) Zacks #1 Rank (Buy) and a long-term Outperform recommendation.
DU PONT (EI) DE (DD): Free Stock Analysis Report
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