Chemical giant EI DuPont de Nemours & Company (DD) reported third quarter 2009 earnings of 45 cents, beating the Zacks Consensus Estimate of 33 cents, helped by significant cost cuts and lower raw material, energy and freight expenses.

Cost cuts have boosted Du Pont’s third-quarter pretax earnings by about $300 million, bringing cost reductions year to date to $900 million. The company’s full-year goal is $1 billion. Raw material, energy and freight costs were 12% lower than the previous year levels, and Du Pont expects these costs for full year 2009 to be about 5 to 6 % lower than 2008.

However, revenue in the quarter slipped 18% to $6.16 billion reflecting a 12% decline in volumes and a 2% fall in prices. Sales in the Coatings & Color Technologies segment decreased 16% to $1.5 billion on continued weakness in motor vehicle markets while sales in the Agriculture & Nutrition segment were down 5% to $1.2 billion, reflecting unfavorable currency impact.

Sales in the Electronic & Communication Technologies declined 13% year over year to $919 million on a 10% fall in volume and 3% lower selling prices driven by weak demand in consumer and general industrial markets.

Sales of $1.3 billion in the Performance Materials division were also down 24%, reflecting weak demand in major markets in all regions, particularly in general industrial and motor vehicle markets. Safety & Protection division sales were down 32% to $1.0 billion on a 22% decline in volumes, driven by lower demand in the industrial and construction markets. Pricing decreases reflected the pass-through of lower chemicals raw material costs.

DuPont has narrowed its full-year 2009 earnings outlook to a range of $1.95 to $2.05 per share. It had previously forecast earnings of $1.70 to $2.10 a share. DuPont expects improving demand in key markets, as well as lower raw material costs.

All major chemical makers, including Dow Chemical Company (DOW), are focusing on cutting expenses. Dow has reined more than $375 million of expenses in the first six months of 2009 and expects synergies of $1.3 billion in the year.

Du Pont is currently the world’s second largest chemical company, in terms of market capitalization, and the fourth in terms of revenues. We maintain our Neutral recommendation on Du Pont.
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