DuPont Reports Upswing in Fourth-Quarter 2014 Profits, Warns of Currency Headwinds in 2015

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Researched by Industrial Info Resources (Sugar Land, Texas)--DuPont (NYSE:DD) (Wilmington, Delaware) reported fourth-quarter 2014 net earnings of $683 million, compared with $185 million a year earlier. Favorable changes in tax benefits and charges for the chemicals, agriculture products and materials producer contributed to fourth-quarter earnings, company executives said.

Fourth-quarter sales fell 5% to $7.38 billion, primarily as a result of portfolio changes and the impact of the stronger U.S. dollar. DuPont warned that the negative currency impact will take a bite out of earnings in 2015.

Industrial Info is tracking 72 active DuPont projects worth $1.62 billion. This includes 55 projects valued at $991 million that are in the construction stages; three projects worth $36 million in the engineering stages; and 14 projects valued at $590 million in the planning stage, where plenty of factors could increase, decrease or totally eliminate the expected spending.

With a total investment value of $500 million, the titanium dioxide (TiO2) plant expansion in Altamira, Mexico, is scheduled for completion in third-quarter 2015. Jacobs Engineering (NYSE:JEC) (Pasadena, California) is serving as the engineering, procurement and construction manager, and ICA Fluor, a joint venture between Fluor Corporation (NYSE:FLR) and Empresas ICA (NYSE:ICA) (Mexico City, Mexico), is the subcontractor. The project will increase the facility's capacity to 350,000 tonnes per year from 150,000 tonnes.

During the quarter ended December 31, the Agriculture segment's sales fell 4% from a year earlier to $1.73 billion. Operating earnings totaled $129 million, an increase of 47% over a year earlier, as lower costs and gains on the sale of businesses more than offset lower sales.

Performance Chemicals sales dropped 6% to $1.56 billion. The segment's operating earnings for the quarter totaled $228 million, a slight drop from the same quarter in 2013, as lower prices for TiO2 and fluoroproducts were offset partially by higher volumes and the sale of one of the segment's businesses. DuPont plans to split off its Performance Chemicals business this year.

Sales by the Performance Materials segment fell 4% to $1.46 billion during the quarter, but operating earnings rose 13% to $332 million. DuPont cited increased ethylene and performance polymer sales volumes, productivity improvement and lower costs.

For all of 2014, net earnings dropped 25% to $3.63 billion from 2013. Sales were $34.7 billion, down 3% due to weaknesses in agriculture markets, portfolio changes and currency impacts. The stronger U.S. dollar makes DuPont products less attractive in economies with weaker currencies.

The company expects $1.8 billion in capital expenditures this year, according to its earnings presentation.

Looking forward, Chief Financial Officer Nicholas Fanandakis said during DuPont's earnings conference call that the impact of the stronger U.S. dollar on overseas sales "will be a substantial headwind for us." He said net sales are expected to be flat with those in 2014, while the company will face more challenges in the agriculture market.

However, the mid-year split-off of DuPont's Performance Chemicals segment, to be named Chemours, will result in a one-time payment of $4 billion in dividend proceeds to DuPont, Fanandakis said. DuPont Chief Executive Officer Ellen Kullman said the proceeds would be returned to shareholders within 12 to 18 months.

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