US DuPont idles some plants as Q1 sales, earnings fall

Stefan Baumgarten


HOUSTON (ICIS)–DuPont first-quarter sales and earnings fell year on year amid nylon pricing pressures and volume declines across the Transportation & Industrial and non-core segments.

Earnings were down due to the absence of prior-year gains in the Electronics & Imaging and Safety & Construction segments, the US-based major reported on Tuesday.

These negatives more than offset “strong gross margin improvement” in Q1, the company said.

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) fell in all of DuPont’s segments, with the exception of Nutrition & Biosciences.

On an organic basis, total net sales were down 2% as 8% growth in Electronics & Imaging and 3% growth in Nutrition & Biosciences could not offset declines in other segments.

The company has idled production at several manufacturing sites, predominantly production plants within its Transportation & Industrial segment, due to the current global automotive environment.

In Transportation & Industrial, Q1 volume declined 8% due to lower auto builds as global automotive production was down nearly 25% year on year.

DuPont ($/m) Q1 2020 Q1 2019 Change
Sales 5,221 5,414 -3.6%
Cost of sales 3,318 3,621 -8.4%
Loss from continuing operations -566 -165 N/A
Net income / loss  -616 521 N/A
Operating EBITDA 1,321 1,430 -7.6%

– Through April, DuPont said the personal protection, water filtration, food and beverage, electronics and probiotics end sectors had performed well.

– However, automotive, oil and gas, and select industrial end markets continue to suffer.

– Meanwhile, the company continues to advance the separation of the Nutrition & Biosciences business in preparation for the planned merger of that business with IFF in 1Q 2021.

Due to the uncertainties from the coronavirus pandemic, DuPont has taken measures to enhance its liquidity position and improve working capital, including:

– Entered into a 364-day $1.0bn revolving credit facility, replacing the $750m revolving credit facility that was set to expire in June 2020.

– Issued $2.0bn bond offering; the proceeds of which will be used to satisfy debt maturities due in November 2020. This facility replaces the $2.0bn 364-day delayed-draw facility announced in April 2020.

– Delayed certain capital investments; now expecting to reduce capital expenditures by about $500m, compared with 2019.

– Accelerated working capital initiatives across each business.

– Increased the anticipated benefits from incremental 2020 cost actions previously announced; now targeting $180m of savings in 2020.

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