DuPont Takes Aggressive Actions to Strengthen Competitiveness and Increase Cash Flow
December 8, 2008
DuPont has announced further actions to address current market challenges and strengthen the company’s competitiveness in 2009, including continued focus on maximizing cash flow, and provided earnings guidance for the fourth quarter 2008 and the full year 2009.
WILMINGTON, DE - DuPont has announced further actions to address current market challenges and strengthen the company’s competitiveness in 2009, including continued focus on maximizing cash flow, and provided earnings guidance for the fourth quarter 2008 and the full year 2009. A steep global decline in construction and motor vehicle sales and consumer spending has resulted in declining industrial production, intensified by inventory reductions across most supply chains. These conditions have precipitated a sharp downturn in demand during the fourth quarter.
In response, DuPont has commenced a restructuring plan with an associated pre-tax charge of about $500 million in the fourth quarter, resulting in a pre-tax earnings increase of about $130 million for 2009 and approximately a $250-million annual run rate. The company expects a loss of $.20 to $.30 per share for the fourth quarter 2008, excluding an estimated $.40 per share significant item charge for the company’s restructuring plan. On a reported basis, the company expects fourth-quarter earnings to be a loss of $.60 to $.70 per share. Full-year 2009 earnings are expected to be about $2.25 to $2.75 per share.
DuPont’s plan is intended to better position a number of its market-leading global businesses for future growth. Approximately 2,500 employee positions will be eliminated, principally in businesses that support the motor vehicle and construction markets in Western Europe and the United States. In addition, certain assets will be rationalized to improve future competitiveness. A pre-tax charge totaling approximately $500 million, or $.40 per share, will be taken in the fourth quarter 2008 for the restructuring plan.
DuPont is accelerating productivity programs started earlier this year to deliver a $600 million fixed-cost pre-tax earnings benefit and $1 billion in net working capital reduction in 2009. Specific actions include reducing 4,000 contractors by year-end 2008 with additional contractor reductions in 2009, implementing work schedule reductions at select locations, adjusting production to market conditions and redeploying more than 400 employees to productivity projects aimed at accelerating reductions of working capital and operating costs.
The company expects a loss of $.20 to $.30 per share for the fourth quarter 2008, excluding an estimated $.40 per share significant item charge for the company’s restructuring plan. Sharply lower sales volumes and resulting lower plant operating rates contributed to the reduced outlook. Fourth-quarter sales are expected to be at least 15 percent lower than fourth-quarter 2007, principally reflecting a significant decline in worldwide sales volumes. On October 22, the company provided fourth-quarter earnings guidance of $.20 to $.25 per share. The company continues to expect year-end free cash flow of about $1.3 billion.
Looking forward, the company expects 2009 earnings in the range of $2.25 to $2.75 per share, anticipating the current global recession will continue well into 2009.