USA: High Costs Cut DuPont’s Projected 2000 Earnings

Citing substantially higher-than-forecast increases in energy and raw materials costs, DuPont today announced it has revised its full-year 2000 earnings per share (EPS) outlook to $2.85 - $2.95 per share, before one-time items, 10-14 per cent higher than the $2.58 earned last year. This revised outlook compares to the current First Call consensus estimate of $3.01. In July, the company reaffirmed its full year 2000 earnings per share growth target despite the anticipated second half impact of high raw materials costs, a weak Euro versus the US dollar and some slowing in the US economy. Since then, raw materials prices have sharply increased, with oil and US natural gas increasing by more than 20 and 30 per cent, respectively. The Euro continues to weaken versus the US dollar, and volume growth is slowing in some markets, particularly apparel. Changes in these three factors since July, when the company announced second quarter earnings, will negatively impact second half results by an estimated $250 - $275m, pre-tax, or 15-17 cents per share, DuPont said last week. For the full year, the negative impact of higher raw material costs and currency is expected to exceed $1bn, pre-tax. Actions taken by the company are expected to more than offset these negative factors, resulting in the projected 10-14 per cent growth in earnings per share, before one-time items. "Our employees have demonstrated tremendous resolve in responding to very challenging economic conditions throughout the year and have aggressively addressed the significant cost challenges we face," said DuPont chairman and CEO Charles O. Holliday, Jr. "The actions taken to improve pricing, control spending and implement Six Sigma are benefitting the bottom line this year and will continue to do so in 2001. Assuming some improvement in energy costs, modest strengthening of the Euro versus the dollar and reasonable economic growth, we are confident we will achieve 10 pe rcent-plus underlying EPS growth in 2001."