HOUSTON (ICIS)--DuPont expects sales for the current Q2 to come in roughly flat quarter on quarter as continued supply chain issues will constrain some of its production, in particular in the Mobility & Materials (M&M) segment, CEO Ed Breen and CFO Lori Koch said during the company’s Q1 earnings call on Tuesday.
However, for the full year, DuPont is raising its sales and profit guidance.
|Q2, estimate||Q1, realised|
*earnings before interest, tax, depreciation and amortisation
Breen noted constraints for key raw materials in DuPont's nylon and polyester product lines that made it hard “to get product out of the door” in the M&M business.
While the situation is gradually improving, supply issues for some materials could constrain DuPont’s production through the end of Q2, he said.
As for semi-conductors, the problems could last through 2021 and even into 2022, he indicated.
The supply squeeze - triggered by coronavirus pandemic effects and aggravated by February's US Gulf coast storm - affects DuPont's customers in the automotive sector, in particular.
While DuPont will likely miss about $100m-120m sales in Q2 because of the raw material supply issues, it will not lose the sales but make up for them once the constraints are easing, Breen said.
Another related “big dynamic” is the raw material cost inflation, estimated to have a Q2 impact of about $90m and a full-year impact of about $300m.
DuPont is seeking to offset the higher raw material costs through price increases, Breen said.
Despite challenges, Q2 sales and earnings will be up sharply year on year from comparable results in Q2 2020, when the first wave of the coronavirus pandemic struck.
Overall, DuPont had a "strong start to the year" in Q1, with positive trends continuing in key end-markets - semiconductor, smartphones, automotive, water filtration, and residential construction, Breen and CFO Koch said.
At the same time, the company is confident that it can "navigate" through the global supply constraints, they said.
With the strong Q1 under its belt, DuPont is now raising its full-year 2021 guidance to $15.7bn-15.9bn of net sales and an operating EBITDA between $3.98bn-4.08bn – up from previous guidance of $15.39bn-15.59bn sales and $3.83bn-3.93bn operating EBITDA.
Thumbnail photo: Ed Breen, DuPont’s CEO and executive chairman