23 October 2012 16:48 [Source: ICIS news]
HOUSTON (ICIS)--US-based DuPont’s restructuring plan, which will cut 1,500 jobs in the next 12-18 months, will sharpen the company’s focus and improve its competitiveness in an uncertain economic environment, CEO Ellen Kullman said on Tuesday.
Following DuPont’s planned disposal of its performance coatings business and the acquisition of the Danisco business, the measures further sharpen the company’s focus on high-growth and high-margin markets in agriculture and nutrition, advanced materials and industrial biotechnology, Kullman said.
“Continuing macroeconomic uncertainty and resulting slowing demand in certain sectors are reminders of why agility and productivity must be a way of life,” Kullman told analysts during DuPont’s third-quarter results conference call.
“Current uncertainties in the global economic outlook, softer demand in certain markets and strength in others require realigning business resources to match current growth opportunities and increase responsiveness to rapidly changing market realities,” she said.
The measures would better align corporate functions with business growth strategies and the expected impact of changing market conditions, she said.
Kullman added that DuPont’s actions were “somewhat surgical” in that each of the company’s businesses assessed what actions, if any, were necessary, to remain competitive under current market conditions.
“Our actions reflect differential management of the portfolio, and not a "one size fits all’ approach”, she said.
“[The restructuring] is about getting back to focusing on creating momentum, streamlining headquarters and corporate staff and really allowing the businesses to respond very agilely in a very uncertain environment,” she said.
The restructuring would impact all regions, she added.
DuPont made the announcement as part of its third-quarter earnings disclosure. Sales for the three months ended 30 September fell 9% year on year and net income plummeted to $10m from $452m in the same period last year.
Hassan Ahmed, head of research at New York-based equity research firm Alembic, said that DuPont’s third-quarter recurring earnings per share of 44 cents missed consensus estimates of 50 cents.
Ahmed added that DuPont’s earnings growth targets appeared doubtful, given its reliance on its performance chemicals business in recent years.
“Keeping in mind that over 60% of DuPont’s earnings growth since the trough of 2009 has come from the performance chemicals business, if this business is indeed cycling down management’s earnings growth targets now appear to look shaky,” Ahmed said in a research note to clients.
Third-quarter sales of DuPont’s performance chemicals business, which includes titanium dioxide (TiO2), were down 19% year on year to $1.7bn.
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