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DuPont Profit Tops Estimates as Sales of Auto Plastics Climb

By Bloomberg News

DuPont, the biggest U.S. chemical maker by market value, reported fourth-quarter earnings that exceeded analysts' estimates as demand climbed for plastics used in autos.

Profit was 11 cents a share after excluding costs to settle claims that an herbicide killed trees and other one-time items, Wilmington, Del.-based DuPont said Tuesday in a statement. The earnings beat the 7-cent average of 10 estimates compiled by Bloomberg. Sales were little changed at $7.33 billion, compared with the $7.25 billion average of 15 estimates.

Adjusted profit in 2013 will be $3.85 to $4.05 a share, an increase of 2 percent to 7 percent from comparable 2012 earnings of $3.77, DuPont said. The company said last month that earnings would increase by "low- to mid-single digits," and the average of 13 estimates was for profit of $3.93.

"You are seeing a rebound in autos and housing," Mark Gulley, a New York-based analyst at BGC Partners LP who recommends buying DuPont shares, said Tuesday by phone.

"Strong demand" from North American automakers helped boost pretax operating profit 68 percent in the performance- materials unit, which makes engineered plastics for car parts, DuPont said.

The 2013 forecast assumes global economic growth of about 2 percent and 5 percent higher costs for raw materials, energy and transportation, primarily because of higher seed making costs, the company said. Capital spending will rise to about $1.9 billion this year, from $1.8 billion in 2012, DuPont said.

Chairman and Chief Executive Officer Ellen Kullman announced 1,500 job cuts in October as a weak global economy challenges her target for annual earnings growth of 12 percent. Net income fell 70 percent to $111 million, or 12 cents a share, from $373 million, or 40 cents, a year earlier.

First-quarter pretax operating profit will drop in three segments, led by a "significant" decline in the electronics unit, while industrial biosciences will lead gains in three other segments, DuPont said in a slide presentation on its website.

Sales in 2013 will climb to $36 billion from $34.8 billion, DuPont said, topping the $35.9 billion average of 17 analysts' estimates.

The fourth-quarter loss in the agriculture unit, which sells crop seeds and pesticides, narrowed to $92 million, from $116 million a year earlier, on improved sales volumes in Latin America, DuPont said.

Earnings in the performance-chemicals unit, the most profitable business last year, fell 54 percent on lower prices for titanium dioxide, a pigment used to whiten paint and plastics. Pretax operating margins in the unit may decline as much as 7 percentage points this year, DuPont said last month.

Earnings from the auto paint unit, which is being sold to Carlyle Group for $4.9 billion, were excluded from adjusted earnings as the business is now accounted for as a discontinued operation. Kullman is shedding the unit as she shifts DuPont's focus to products that help meet global demand for food, energy and security.

Items excluded from adjusted fourth-quarter profit include $135 million to resolve claims that Imprelis weedkiller destroyed trees, $66 million in restructuring costs, a $33 million impairment charge in the performance chemical unit and a $117 million gain from the sale of an agriculture business. Imprelis charges now total $750 million and may rise to $900 million, DuPont said.

The full-year forecast excludes pension costs and an anticipated U.S. tax gain, DuPont said.

DuPont, founded in 1802 to make gunpowder, produces thousands of products from Corian countertops and Teflon coatings to Tyvek weather barrier and Kevlar bullet-proof fibers.


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