After reporting a healthy last quarter of 2009, chemical giant EI DuPont de Nemours & Co. (DD) is eyeing a further 20% compounded annual growth in earnings during 2010−2012. The company expects earnings of $2.50 to $2.70 per share in 2010.
DuPont anticipates a 10% growth in top line for the 2010−2012 period. The company also plans to capture $1 billion in fixed cost productivity and $1 billion in working capital productivity gains during this period. In 2009, DuPont saw the emerging markets add about 30% to revenues. By 2012, the company expects sales from these markets to total about $12 billion, or 35% of total sales.
Last year, DuPont invested about 75% of the total research and development expenditure of $1.4 billion. More than 70% of the company’s capital expenditures in 2009, addressed macro issues such as expanding seed production to improve agriculture productivity, enhancing capacity for DuPont™ Kevlar® aramid fiber for personal protection, and expanding capacity for photovoltaic materials for solar cells, all of which are in line with significantly increased demand.
DuPont recently opened its new photovoltaic application lab Delaware to meet the rising need for energy as world population expands. The company believes improvements in photovoltaic technology will play a key role in meeting the world’s energy requirements. DuPont expect sales of photovoltaics to grow more than 50% in 2009 and exceed $1 billion in 2011.
We reaffirm our Neutral recommendation on DuPont.
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