EI DuPont de Nemours & Company’s (DD) Circleville plant in Ohio received $50.73 million in tax credits for a new production line under the American Recovery and Reinvestment Act. The $50.73 million in tax credits will be used to expand production of high-performance polyvinyl films, part of the critical backsheet component of solar panels. The credit makes up only a chunk of nearly $125 million awarded to Ohio from the Recovery Act’s Advanced Energy Manufacturing Tax Credit program. The government plans to distribute about $2.3 billion in tax credits to create energy manufacturing jobs.
 
The funds, which were authorized through the Recovery Act’s Advanced Energy Manufacturing Tax Credit program, represent investment tax credits of 30% for facilities that manufacture energy equipment. To be eligible for the tax credit, manufacturers must produce solar, wind, and geothermal energy equipment; fuel cells, microturbines and batteries; electric cars; electric grids; energy conservation technologies; and equipment that capture and sequester carbon dioxide or reduces greenhouse gas emissions. DuPont is currently the world’s second largest chemical company in terms of market capitalization and fourth in terms of revenues. DuPont’s Performance Chemicals segment is targeting a 5 9% revenue growth from 2009 to 2012. By 2012, the company is targeting emerging markets sales in this segment to increase to roughly 35%, compared to 28% in 2008.
 
We believe DuPont’s titanium dioxide business, which is highly levered to the construction market, should enjoy growing demand from the emerging markets owing to the increase in disposable income and government stimulus programs which will drive growth in the residential and commercial construction markets. DuPont is also looking at improving cost productivity. The company has managed a 4% reduction in fixed costs in this segment in the last 4 years. We maintain our Neutral recommendation on DuPont.
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