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DuPont’s third-quarter results show a 48% decrease in income from continuing operations, down US$277 million from US$579 million in Q3 2011 to US$302 million.
The company said during a media conference call that it has instigated a restructuring plan to increase productivity, enhance competitiveness and accelerate growth, stressing that it was on track to achieve its full-year 2012 productivity targets for both fixed costs and working capital.
The plan is expected to deliver pre-tax cost savings of about US$450 million (US$300 million in 2013) by eliminating corporate costs supporting Performance Coatings as well as additional cost-cutting actions to improve competitiveness, insists DuPont.
Sales of US$607 million were down 28%, primarily due to soft photovoltaic volume and lower silver cost pass-throughs. Nicholas Fanandakis, DuPont executive VP and chief financial officer said in a conference call: “The single largest driver for the drop in local prices in Asia-Pacific resulted from the decrease in silver cost, related to our Solamet paste, which is passed through direct to the customer.”
Volume in Asia-Pacific declined 10%, primarily due to lower TiO2 and photovoltaic materials volume.
DuPont VP Karen Fletcher affirmed that, “DuPont products like Solamet and Tedlar remained industry leaders, and we are committed to our mission of being the leading supplier of differentiated materials for photovoltaics and consumer and other electronic markets.”
On a sequential view, growth in PV materials declined due to inventory destocking throughout the PV value chain.
Furthermore, DuPont stated that trade actions in the United States and investigations in Europe are creating downward pressure on end-use demand. In consumer electronics, the company continues to see strong demand, fueled by ongoing growth in smartphones and tablets.
For the fourth quarter, DuPont expects sales to be essentially flat with substantial earnings declined.
Fanandakis stated that, “In light of our current operating environment, we have reduced our planned capital expenditures for the full year to about US$1.9 billion or 10% below our previous guidance.”
The company said it had lowered its outlook for PV installations in the second half, which reflects today's market environment and pending trade actions.
“Our current estimate is that global PV installation rates for 2012 will be flat-to-low-single digits, depending on the fourth quarter installation rates. There are no major subsidies expiring at year-end, which has historically caused spikes in fourth quarter demand,” explained Fletcher.
DuPont claimed that its electronics and communications earnings decline was essentially all related to weak PV markets and an oversupply of PV modules. Trade actions in the United States and trade investigations in the European Union add to market uncertainty and are negatively impacting demand. The bright spot in the segment was the consumer electronics market bolstered by demand for smartphones and tablets.
The company plans to deliver total pretax cost savings of US$450 million by eliminating corporate cost previously allocated to Performance Coatings, while taking additional cost-cutting actions to improve competitiveness. DuPont expects to deliver US$300 million of savings in 2013 and the full amount in 2014.
Fanandakis said: “Our targets have been established from the bottom up, with specific projects already identified and rigorous monitoring and accountability in place. To achieve these savings, we expect to record a restructuring charge of about US$210 million. US$152 million of this charge was recorded in the third quarter with the balance to come in quarter four. These actions will make us a leaner, more agile company and better position all of our businesses for future growth.
“This helps to ensure our inventory values are not inflated,” continued Fanandakis. “Concurrent with taking actions to support growth, we have delivered approximately US$285 million of fixed cost productivity to date, well on our way towards exceeding our commitment of US$300 million for the full year.”
"Today, we are taking additional actions to improve competitiveness and accelerate market driven innovation and growth by fine-tuning the organization, eliminating costs and expanding beyond our everyday focus on productivity," said DuPont chair and CEO Ellen Kullman.
The company’s restructuring plan includes the dismissal of 1,500 employees globally in the next 12-18 months.
Further to this, Bill Feehery, global business director, DuPont Photovoltaic Solutions released a statement: "DuPont recently announced steps it will be taking broadly to improve productivity and efficiency in order to grow and compete more effectively in key markets.
"Many DuPont businesses, including DuPont Photovoltaic Solutions (DPVS), have been affected by the slowing global economy and market shifts in demand and supply."
Feehery continued, "The PV trade action, specifically, is a factor that is expected to continue to impact our business into 2013 due to uncertainty in the market about the eventual outcome. Meanwhile, overcapacity among PV module manufacturers is driving intense price competition all along the supply chain. The combination of the uncertainty and intense cost pressure is very challenging."While the photovoltaic market remains fundamentally sound and growing long-term, our business needs to align with the slower anticipated 2013 market demand and position itself strongly for long term growth. Over the next several weeks and months, we will be fine tuning our organization to reflect the competitive realities and shifts in market demands.
"DuPont is not disclosing details by business or location," concluded Feehery.
