DuPont to follow BASF, Dow cutbacks – JP Morgan

21 November 2008 15:46  [Source: ICIS news]

TORONTO (ICIS news)--DuPont will likely curtail production in coming months, following similar moves by BASF and Dow Chemical, JP Morgan said on Friday.

 

“We expect DuPont to significantly tighten its belt in response to slowing global demand and increased customer inventory reductions,” the analysts said.

 

DuPont’s cost reduction initiatives and a strong performance in its agricultural operation may not be able to fully offset the effects from contracting global demand, the analysts said.

 

JP Morgan cut its target price for DuPont’s shares to $30, from $37.

 

The share shares were down 0.55% to $21.83 in early Friday morning trading in New York, with the Dow Jones Industrial Average down 1.52 points to 7,550.77

 

The bank also reduced its earnings per share (EPS) estimate for DuPont’s fourth quarter by 10 cents to 22 cents and its 2009 EPS estimate by 25 cents to $2.75.

 

DuPont, while by no means immune to a downturn in global demand, had a more defensive portfolio of assets relative to Dow Chemical, the analysts said. The bank rates the shares “overweight.”

 

Responding to an inquiry by ICIS news about possible cutbacks, DuPont said while it was in a strong financial position it would continue to continue to closely monitor markets and “adjust accordingly.”

 

“We anticipate further weakness in automotive and construction markets and slowdown in US and western Europe markets,” the company said in a statement.

 

“We expect emerging markets growth to continue, but at a less robust pace,” it added.

 

Earlier on Friday, Citigroup reduced its price targets and EPS estimates for five US chemicals majors, including DuPont, citing a massive destocking in the chemical supply chain and BASF’s move this week to idle plants and reduce production.

 

Nigel Davis in London contributed to this article.

 

For more on Dupont  visit ICIS company intelligence

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By: Stefan Baumgarten
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