DuPont expects slow N America recovery, ‘soft landing’ in China

25 October 2011 17:08  [Source: ICIS news]

HOUSTON (ICIS)--DuPont sees a slow recovery continuing in North America, despite high unemployment and weak consumer confidence, CEO Ellen Kullman said on Tuesday.

“While there are issues of unemployment and weak consumer confidence, there are also some positive signs, such as rising retail and automotive sales,” she told analysts during the US-based chemical company’s third-quarter results conference call.

US personal savings rates have normalised, and industrial production in the manufacturing sector is growing, Kullman added.

Meanwhile, DuPont’s expectations for Europe are mixed, she said.

Overall, the recovery in Europe is slow, with parts of the region “in or near recession”, she said, noting the exception of Germany, which saw a strong export-led recovery.

“Our own results for the third quarter indicate a very mixed bag,” Kullman added.

DuPont’s sales volumes in western Europe were down, but its volumes in “developing Europe”, as well as in the Middle East and Africa, were up.

For Latin America, DuPont’s outlook is positive, with strong sales growth for the company’s agricultural products, Kullman said.

Finally, DuPont remains “positive on Asia”.

“We expect a soft landing in China, with GDP growth [in 2012] around 8.0%,” she said.

“There are certainly pockets of concern, such as inflation and currency effects, although these are outweighed by the positive impact of growing local demand,” Kullman added.

Earlier on Tuesday, DuPont reported that its third-quarter net income increased by 23% year on year to $452m (€325m).

DuPont’s third-quarter sales were up 32%, to $9.2bn, compared with the same period last year. However, on a sequential comparison, third-quarter sales were down from $10.3bn in the second quarter of this year, and from $10.0bn in the first quarter of 2011.

Hassan Ahmed, head of research at New York-based equity research firm Alembic Global Advisors, said DuPont’s third-quarter volume growth appeared to be relatively weak.

“The company managed to grow volumes by a meagre 1% with volume declines in the US, EMEA [Europe, Middle East and Africa] and Asia – minus 1%, minus 2%, and minus 1% respectively – offset by continued volume momentum in Latin America, with 17% growth,” he said in a research note.

He pointed out that pricing across the company was up 15%: “Tepid volumes, in our view, were not offset by stellar pricing gains.”

DuPont’s share price was down marginally 0.02% to $46.08/share in Tuesday morning trading on the New York Stock Exchange at 11:02 local time.

($1 = €0.72)

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By: Stefan Baumgarten
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