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DuPont Earnings Drop 43 Percent: Energy and Raw-Materials Costs and Hurricane Losses at a Plant in Miss. Slammed the Wilmington Chemical Firm

Posted on: Wednesday, 25 January 2006, 12:00 CST

By Bob Fernandez, The Philadelphia Inquirer

Jan. 25--DuPont Co., struggling with the after-effects of Hurricanes Katrina and Rita and energy costs, said yesterday that its fourth-quarter profit fell 43 percent from the year-earlier period.

The Wilmington company warned that the downward pressure on earnings had slipped into the current quarter. It also said a plant heavily damaged in Hurricane Katrina, in DeLisle, Miss., would not be fully operational until April.

The chemical company earned $153 million, or 16 cents a share, in the 2005 fourth quarter compared with $278 million, or 28 cents a share, in the year-earlier period. Sales and other revenue were $6.2 billion compared with $6 billion.

For the year, the company had sales and other revenue of $28.5 billion compared with $28 billion in 2004. Its profit was $2.1 billion, or $2.08 a share, compared with $1.8 billion, or $1.78 a share, in 2004.

DuPont shares fell 29 cents on the New York Stock Exchange to close at $39.26, near the bottom of their 52-week trading range. The stock has traded between $37.60 and $54.90 in the last year, and the company is in the midst of a $5 billion share buyback to boost its stock price.

Energy costs, driven by natural gas, were $350 million higher in the 2005 fourth quarter than in the year-earlier period. The company said it expected energy costs to rise at least 10 percent in 2006. DuPont uses natural gas as power in its plants and as a raw material in its manufacturing processes.

DuPont previously reported that unplanned outages at three plants -- in Brazil, the Netherlands and Ohio -- hurt fourth-quarter performance. The company's agriculture and nutrition business lost ground, in part because of weak insecticide sales in Asia and problems in Brazil.

In a conference call with analysts yesterday, DuPont chairman and chief executive officer Charles O. Holliday Jr. called the fourth quarter's performance "unacceptable," but said: "We are focused on executing our strategies and moving fast."

Energy and raw-materials costs in 2005 were $1 billion more than they were in 2004, Holliday said. The company has been pushing through price increases for its products to recover the costs, he said.

In the agriculture and nutrition division, "strong competitors outperformed us in some of our markets," Holliday said. "We are not satisfied with just catching up."

Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.

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Source: The Philadelphia Inquirer

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