Chemical maker DuPont Co. reported a $629 million loss for the fourth-quarter Tuesday due to lower sales and a hefty restructuring charge, and cut its earnings forecast for 2009.
DuPont shares fell 38 cents, or 1.6 percent, to $22.80 in morning trading.
The Wilmington-based company said its loss for the quarter amounted to 70 cents per share, compared with a profit of $545 million, or 60 cents per share, a year ago. Excluding a charge of $380 million, or 42 cents per share, from a previously announced restructuring program, the fourth quarter loss was $249 million, or 28 cents per share. Analysts surveyed by Thomson Reuters, on average, expected a smaller loss of 24 cents a share. The analyst estimates typically exclude one-time items.
Net sales in the quarter dropped 17 percent to $5.8 billion from $6.98 billion, as the company reported a 20 percent decline in volume. Higher prices in all regions and across all business segments were more than offset by volume declines and negative currency effects.
The company said declines in consumer spending, construction and motor vehicle sales led to sharp drop in demand and a steep decline in global industrial production.
Full year 2008 earnings were $2 billion, or $2.20 per share, down from $2.9 billion, or $3.22 per share, in 2007.
Citing weak economic conditions, the company revised its full-year earnings estimate for 2009 to a range of $2 to $2.50 per share, down from its previous guidance of $2.25 to $2.75 per share. It also announced further cuts to its contractor work force.
Last month, DuPont announced that it would cut 2,500 jobs and was releasing 4,000 contractors by the end of 2008, with additional contractor reductions expected this year.
CEO Ellen Kullman said Tuesday that the company is on track with its job cuts, and that it plans to pare a total of 8,000 contractors from its rolls by the end of this month. DuPont is eliminating merit salary increases this year and cutting work schedules for some employees, she said.
"We're attacking costs and expenses aggressively," Kullman said, adding that the benefits of the restructuring will be seen in the second half of the year.
At the same time, the company signaled that it was not considering dividend cuts, just hours after Dow Chemical Chief Executive Andrew Liveris said the company may have to cut quarterly dividends for the first time ever.
Dow has paid a steady dividend since 1912, but has come under significant pressure after a state-owned Kuwaiti company pulled out of a joint-venture just days before it was to close late last year. Dow had planned to use billions from that deal to help fund the $15.4 billion acquisition of specialty chemicals maker Rohm & Haas.
"We understand that the dividend is the cornerstone of our valuation," said DuPont chief financial officer Jeff Keefer.
Kullman said generating cash remains the company's primary objective in the short term, and that she is confident that DuPont will emerge from the current economic turmoil "stronger, leaner and more agile, and better poised for growth."
DuPont, however, expects weak market conditions throughout the year.
"The business environment remains very challenging and uncertain," Keefer said.
In the final quarter of 2008, volume dropped 22 percent in the United States and 20 percent in the Asia Pacific region, with 19 percent declines in Europe and the Canada-Latin America region.
Among the company's business segments, sales in the performance materials unit were off 30 percent to $1.2 billion as volume dropped by almost a third.
The company said it expects global economic conditions for first quarter of 2009 to be similar to those in the fourth quarter, with very weak demand in most key markets, excluding agriculture.
Jim Borel, group vice president in charge of DuPont's agricultural businesses, said he expects continued volume growth in North American seed markets.
Kullman described agriculture as "the bright spot on the first-quarter volume horizon."
DuPont said it expects to continue "an appropriate level of spending" for high-growth, high-margin businesses, including seed products and photovoltaics.
"We are acutely focused on executing with a sense of urgency across the company," said Kullman, adding that the company will deliver about $730 million in fixed cost reductions and about $1 billion in reduced working capital for 2009.
"This is in our control, and we will deliver," she said.
