DuPont Takes Aggressive Actions to Strengthen Competitiveness and Increase Cash Flow

Date: 10 December 2008
Source: DuPont
DuPont on December 5, 2008 announced further actions to address current market challenges and strengthen the company’s competitiveness in 2009, including continued focus on maximizing cash flow, and provided earnings guidance for the fourth quarter 2008 and the full year 2009.

A steep global decline in construction and motor vehicle sales and consumer spending has resulted in declining industrial production, intensified by inventory reductions across most supply chains.These conditions have precipitated a sharp downturn in demand during the fourth quarter.

“We have taken immediate and aggressive actions to maximize cash flow by reducing cost, working capital and capital expenditures in response to current market challenges,” said DuPont Chairman and CEO Chad Holliday. “We will build on our strong financial and market positions and continue prudent financial discipline in navigating through this challenging economic environment. We are providing 2009 earnings guidance and underlying assumptions in our effort to be as transparent as possible with respect to the current and expected impact of the global recession. We are, however, realistic about the potential for further change and we will adjust actions as conditions warrant.”


  • Full-year 2008 free cash flow is expected to be about USD 1.3 billion, as planned, with working capital improvements offsetting earnings decline. Free cash flow will increase to about USD 2.5 billion in 2009, reflecting a planned USD 1 billion net working capital reduction and a 10 to 20 percent reduction in capital spending.
  • DuPont is taking actions to deliver in 2009 USD 600 million in fixed cost productivity improvements, excluding volume and currency, in addition to about USD 130 million in cost reductions from its restructuring plan. This compares to an original 2009 cost productivity plan of USD 200 million.
  • DuPont has commenced a restructuring plan with an associated pre-tax charge of about USD 500 million in the fourth quarter resulting in a pre-tax earnings increase of about USD 130 million for 2009, and approximately a USD 250 million annual run rate.
  • The company expects a loss of USD .20 to USD .30 per share for the fourth quarter 2008, excluding an estimated USD .40 per share significant item charge for the company’s restructuring plan. On a reported basis, the company expects fourth quarter earnings to be a loss of USD .60 to USD .70 per share.
  • Full-year 2009 earnings are expected to be about USD 2.25 to USD 2.75 per share.

Restructuring Plan

DuPont’s plan is intended to better position a number of its market-leading global businesses for future growth. Approximately 2,500 employee positions will be eliminated, principally in businesses that support the motor vehicle and construction markets in Western Europe and the United States. In addition, certain assets will be rationalized to improve future competitiveness. A pre-tax charge totaling approximately USD 500 million, or USD .40 per share, will be taken in the fourth quarter 2008 for the restructuring plan. These actions are expected to produce a pre-tax earnings increase of about USD 130 million for 2009 and about a USD 250 million annual run rate.

Accelerated Cost and Working Capital Productivity

DuPont is accelerating productivity programs started earlier this year to deliver USD 600 million fixed cost pre-tax earnings benefit and USD 1 billion in net working capital reduction in 2009. Specific actions include reducing 4,000 contractors by year-end 2008 with additional contractor reductions in 2009, implementing work schedule reductions at select locations, adjusting production to market conditions and redeploying more than 400 employees to productivity projects aimed at accelerating reductions of working capital and operating costs.

4th Quarter 2008 Earnings Guidance

The company expects a loss of USD .20 to USD .30 per share for the fourth quarter 2008, excluding an estimated USD .40 per share significant item charge for the company’s restructuring plan. Sharply lower sales volumes and resulting lower plant operating rates contributed to the reduced outlook. Fourth quarter sales are expected to be at least 15 percent lower than fourth quarter 2007, principally reflecting a significant decline in worldwide sales volumes. On October 22, the company provided fourth-quarter earnings guidance of USD .20 to USD .25 per share. The company continues to expect year-end free cash flow of about USD 1.3 billion.

2009 Earnings and Cash Outlook

The company expects 2009 earnings in the range of USD 2.25 to USD 2.75 per share, anticipating the current global recession will continue well into 2009. Actions to increase cash flow are expected to generate about USD 2.5 billion in free cash flow in 2009, about double the level anticipated in 2008. Capital expenditures are expected to be in the range of USD 1.6 to USD 1.8 billion, compared to USD 2.0 billion for 2008. Growth investments will continue for high-growth, high-margin businesses including seed products and photovoltaics. Pre-tax cost savings from the restructuring plan and productivity projects are expected to be about USD 730 million in 2009. DuPont anticipates a USD .40 to USD .50 per share increase in pension expense. While favorable conditions in global agriculture markets are expected in 2009, the company’s revenue growth in 2009 will be limited by expected lower demand for non-agriculture related products and the impact of currency exchange rates.

“DuPont has market-leading global businesses, solid financial fundamentals, and strong growth opportunities,” Holliday said. “We are aggressively managing every facet within our control to maximize cash and assure we are positioned in the long term to take advantage of above-trend growth opportunities in key markets, especially where our science-based products position us among the market leaders.”

Use of Non-GAAP Measures

Management believes that certain non-GAAP measurements, such as income excluding significant items, are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.

600450 DuPont Takes Aggressive Actions to Strengthen Competitiveness and Increase Cash Flow
Date: 10 December 2008
Source: DuPont

See more news about:

See more from these topics:

Others also read

Mark the Date for “Everlam Laminated Architectural Glass Event” on 22- 23 Sept 2015 in Hamm-Uentrop, Germany.   Everlam is organizing a customer-only event in its manufacturing facility in Germany.
DuPont announced on July 23, 2015 that it has named Marc Doyle senior vice president for its Safety & Protection businesses, reporting to Ellen Kullman, chair and CEO. Matthew L.
JA Solar and DuPont held a strategic cooperation signing ceremony at the DuPont China R&D Center in Shanghai on December 9, 2014, in support of further collaboration on solar technology and the use of advanced materials from DuPont to help improve the power output, durability and return on investment for solar energy systems.  Yong Liu, chief operating officer, JA Solar (left front), Chuck Xu, global business director, DuPont Photovoltaic Solutions (right front), Matthew Trerotola, DuPont executive vice president (back row, fourth from right) and Tony Su, president of DuPont Greater China (Back row, third from right) were among those who attended the ceremony.
TOKYO, Japan, Kuraray Co., Ltd. (“Kuraray”, TSE:3405) reached an agreement to sell the European PVB film business formerly owned by European subsidiaries of E.
Advanced Materials Key to Enhance the Performance and Durability of Solar Energy Systems - DuPont Photovoltaic Solutions (DuPont) is highlighting how advanced materials help to improve the power output, durability and return on investment of solar energy systems to address India’s energy challenges, during the 8th Renewable Energy India Expo from September 3rd to 5th, 2014 in  Greater Noida.  The DuPont booth (Hall 5-35) will feature its latest advanced solar materials, as well as solar panels made using DuPont materials from Tata Power Solar.
DuPont has named Gregory R. Friedman as its vice president of Investor Relations, effective Sept. 1, succeeding Carl J. Lukach who has been appointed vice president, Treasury, Tax and Investor Relations for the new Performance Chemicals company.

Add new comment