DuPont eyes quick decision on potential unit sale
CHARLESTON, W.Va. -- Executives at DuPont Co. said Tuesday they have made "significant progress" in exploring options for a potential sale of the company's performance chemicals unit, which is tied to operations at the company's Belle and Washington plants.
The company announced in July it was considering several strategic alternatives for the unit, which produces a range of products including Teflon, fluoropolymers and titanium dioxide.
DuPont has been under pressure from some investors and analysts this year to sell off the unit, which has been under pressure due to lackluster global economic growth and price pressure in commodity markets.
That underperformance has been a drag on the company's overall growth, which is being driven by agricultural products businesses.
Ellen Kullman, chairwoman and chief executive officer at DuPont, said during the company's earnings conference call Tuesday that executives were actively evaluating options for the unit.
"We are moving with a sense of urgency," Kullman said.
She said the company was still working to evaluate future growth prospects of the unit, as well as the effect a sale could have on other factors, such as the company's dividend, debt levels, pensions and tax payments.
"Since our July announcement we've made significant progress in our effort to evaluate a wide range of options," she said. "Our primary objective is to identify the alternative that creates the most value for our shareholders."
Selling off the division could have an effect on operations at the company's plants in West Virginia. Both the Washington and Belle plants, which employ a combined 2,000 workers, have operations tied to the division.
The Washington plant produces DuPont's Teflon and Tefzel fluoropolymers for the performance chemicals segment. The Belle plant also produces a significant amount of chemicals for the unit.
However, both plants also have operations tied to the company's agricultural products unit, the division analysts feel has the greatest profit potential for the company.
In addition to its DuPont manufacturing, the Belle site also performs toll manufacturing for Lucite International and has two tenant businesses, Praxair and Kureha.
A DuPont company spokeswoman said earlier this year that it would be too early to speculate about the potential impact a sale could have on the West Virginia plants until DuPont executives decide exactly what they will do with the performance chemicals unit.
Kullman did not go into detail Thursday about the specific options the company was still considering, though she told analysts the company hopes to make a decision in the coming months.
"We're looking at lot of different options," she said. "We are operating with a sense of urgency and we want to get this done as quickly as we can."
DuPont on Tuesday reported third-quarter net income of $285 million, or 30 cents per share, on revenue of $7.8 billion. Removing one-time tax and pension costs, earnings were 45 cents per share, up from 43 cents per share last year and topping the 41 cents Wall Street analysts were expecting, according to a FactSet poll.
The company said strong demand for agricultural products in Latin America offset weak pricing for the performance chemicals unit's key industrial pigment titanium dioxide, or TiO2, a whitening pigment used in a wide range of products, from paint to toothpaste.
While the performance chemicals unit saw volume increase 12 percent in the third quarter, that was not enough to offset the steep price declines for titanium dioxide, refrigerants and fluoropolymers, along with higher raw material inventory costs.
The unit's operating earnings fell 38 percent to $254 million. Third-quarter results also included a one-time pretax charge of $72 million related to DuPont's settlement of titanium dioxide antitrust litigation.
DuPont's agriculture unit continued to lead the company's performance, with volume up 10 percent and prices improving slightly.
DuPont shares rose 71 cents, or 1.2 percent Tuesday, to close at $60.17, near their 52-week high of $60.86.
The Associated Press contributed. Contact writer Jared Hunt at email@example.com or 304-348-4836.