EI DuPont de Nemours & Co.’s (DD) first quarter fiscal 2010 earnings of $1.24 per share surpassed the Zacks Consensus Estimate of $1.05. The company had earned 54 cents in the year-ago quarter. The sharp improvement was attributable to the strong showing across all the segments of the company.
Net sales in the reported quarter climbed 23% year-over-year to $8.48 billion, driven by 19% higher volume, 2% higher local selling prices, a 3% positive impact from exchange rates in addition to a 1% reduction from portfolio changes. Total revenues in the quarter, including net Other income, came in at $8.84 billion as compared to $7.27 billion in the year-ago quarter.
Sales in the Agriculture & Nutrition segment in the reported quarter were up 6% to $3.2 billion, driven by a 1% increase in volumes and a 5% rise in prices. Segment sales reflect higher North American seed volumes and seed price gains in each region. This was partially offset by delays in the European planting season.
Crop protection product volumes were down slightly, primarily due to shifts in the northern hemisphere sales patterns. The decrease was partly offset by strong worldwide sales for Rynaxypyr. Operating profit for the segment climbed 10% year-over-year to $941 million primarily because of currency and higher volumes.
Sales in the Electronics & Communications segment were up 73% year-over-year to $631 million. Sales reflect 60% higher volumes and 13% higher prices. The higher volumes were primarily attributable to strong worldwide demand led by the Asia-Pacific region, reflecting broad-based recovery particularly for photovoltaics and semi-fab materials. Operating profit for the quarter stood at $105 million as against an operating loss of $34 million in the year-ago quarter.
Sales in the Performance Chemicals segment increased 32% year-over-year to $1.4 billion. The sales increase was led by 30% higher volumes coupled with 3% higher selling prices. Volume increases were primarily driven by a recovery in titanium dioxide and fluoropolymers. Operating profit improved $146 million year-over-year to $190 million. The increase primarily reflected higher volumes.
Sales in the Performance Coatings segment increased 23% to $902 million on higher selling prices and volumes. Volumes were 17% higher and selling prices increased 6%. The higher volumes reflect a greater demand in global automotive OEM markets coupled with strong demand in the Asia-Pacific market. Operating income in the quarter came in at $45 million as against an operating loss of $75 million in the year-ago quarter. The improvement reflects lower raw material costs and aggressive fixed cost reductions.
Performance Materials sales for the quarter stood at $1.5 billion, reflecting a 63% year-over-year increase. The increase reflects 56% higher volumes coupled with a 7% increase in selling prices. The higher volumes in the quarter are driven by an improvement in automotive, industrial, consumer and electrical markets, with strong volume recovery in all regions, particularly the Asia-Pacific and Europe .
Segment operating profit for the quarter stood at $230 million as against an operating loss of $146 million in the year-ago quarter. The improvement was based on higher volumes, lower raw material costs and fixed cost productivity improvements.
Safety and Protection segment sales climbed 10% year-over-year to $789 million. The rise in sales in the segment reflects an 8% increase in volumes and 2% higher selling prices. The volume increase in this division is mainly attributable to the recovery witnessed in the automotive and industrial markets in addition to the moderate strengthening in construction markets.
Operating profit for the quarter came in at $102 million as against an operating profit of $64 million in the year-ago quarter. The increase primarily reflected lower raw material costs and higher volumes.
2010 Outlook
The chemical maker raised its outlook for 2010. The company now expects to earn between $2.50 and $2.70 per share. The previous projection of the company was in the range of $2.15 – $2.45 per share. The Zacks Consensus Estimate for 2010 is $2.38 per share.
The improved forecast reflects stronger-than-expected sales growth and improved pre-tax operating margins based on continuing global economic expansion with strong demand particularly in the Asia-Pacific region. DuPont now expects free cash flow to be greater than $1.7 billion as opposed to the original expectation of greater than $1.7 billion.
Currently, we are Neutral on DuPont.
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