DuPont Posts Loss on $2.5-billion Impairment Charge in Polymer Business
2020-07-31    [Source:Chemical week]
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PUdaily, Shanghai —— DuPont reports a second-quarter net loss of $2.5 billion, reflecting the impact of a $2.5-billion noncash impairment charge in the transportation and industrial segment and restructuring costs. Adjusted earnings were $514 million, down 19% year on year (YOY). Reported adjusted earnings of 70 cts/share were down 30% YOY and 11 cts/share above consensus estimates, as reported by Zacks Investment Research. Net sales of $4.8 billion were down 12% YOY. Organic sales and volumes were both down 10% YOY. 

    “We delivered on our structural cost commitments and generated organic revenue growth in the electronics & imaging and nutrition & biosciences segments despite significant declines in global economic activity,” says Ed Breen, DuPont chairman and CEO. “Additionally, we saw continued strength in Tyvek protective garment and water end markets, achieving double-digit revenue growth for the second consecutive quarter.”

    On a regional basis, organic sales increased 1% YOY in Asia Pacific while the US and Canada, EMEA, and Latin America each declined mid-to-high-teens percent. For the third quarter, DuPont expects sales to be slightly up sequentially with improvement in automotive and residential construction mostly offset by seasonal patterns in nutrition and biosciences as well as the impact of supply constraints across the Tyvek business as the company performs routine maintenance on the assets, says Lori Koch, CFO of DuPont. Oil and gas, aerospace, industrial, and commercial construction markets will remain challenged, Koch adds. 

    The electronics and imaging segment reported second-quarter net sales of $905 million, up 5% YOY. Operating EBITDA for the segment was $277 million, up 13% YOY driven primarily by volume gains in semiconductor technologies and cost productivity actions. Strong volume gains in semiconductor technologies more than offset weaker demand in interconnect solutions and image solutions.

    The nutrition and biosciences segment reported net sales of $1.5 billion, down 1% YOY. Operating EBITDA for the segment was $418 million, an increase of 8% YOY. Favorable product mix led by gains in probiotics and animal nutrition, as well as cost productivity actions, generated the improvement in operating EBITDA margins.

    Transportation and industrial reported net sales of $832 million, down 34% YOY. Operating EBITDA for the segment was $49 million, a decrease of 86% YOY, driven primarily by charges of approximately $130 million associated with temporarily idling approximately 50% of polymer capacity to align supply with demand. Volume declined 28% due to lower auto builds, as global automotive production was down approximately 45% YOY. The impact of COVID-19 on other key industrial markets, in addition to automotive, contributed to the double-digit volume declines.

    Safety and construction reported net sales of $1.2 billion, down 7% YOY. Operating EBITDA totaled $349 million, a decrease of 9% YOY, primarily from lower volumes partially offset by cost productivity actions and favorable product mix. 

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