• In a challenging environment, DuPont ended 2008 with a strong balance sheet, delivering solid cash performance of $1.1 billion free cash flow, in line with company targets.
• DuPont reported a fourth quarter 2008 loss of $.70 per share. Excluding a $.42 per share charge from a previously announced restructuring program, the fourth quarter loss was $.28 per share, in line with guidance.
• As anticipated, declines in construction, motor vehicle sales and consumer spending, magnified by inventory destocking across most supply chains during the fourth quarter, caused a steep decline in global industrial production. These conditions precipitated a sharp downturn in demand and the company’s sales volume. Agriculture fundamentals remain strong.
• Weak industrial economic conditions are expected to continue in 2009. The company revised its full-year 2009 earnings outlook to a range of $2.00 to $2.50 per share. The previously provided full-year outlook was $2.25 to $2.75 per share.
• Full year 2008 earnings were $2.20 per share versus $3.22 in 2007. Excluding significant items, 2008 earnings were $2.78 per share versus $3.28 in the prior year.
“DuPont enters 2009 addressing challenging economic conditions head-on,” said DuPont CEO Ellen J. Kullman. “We are intensely focused on productivity, while generating earnings and cash. Our market-leading businesses and internal discipline generated solid cash performance in 2008. We do not underestimate the difficulties presented by the current environment. We will rigorously guard our financial strength and flexibility, while carefully preserving our science-driven competitive advantage.”
DuPont is well-positioned for growth in emerging markets. The potential for DuPont penetration into these economies is high. DuPont already have a solid foundation in emerging markets, where the company have established strong brands, reputation and key local relationships.
Recognizing the size and importance of the Middle East and Gulf region, DuPont is adapting an organizational structure to continue to focus on the different needs of these diverse markets and build presence of senior leaders in these emerging markets. The new structure will serve as a critical next step to ensure high-level relationships with business partners and accelerate further growth in the future.
Global Consolidated Sales and Net Income
Consolidated net sales in the fourth quarter of $5.8 billion were 17 percent lower than prior year, reflecting 20 percent lower volume, 7 percent higher local prices, 3 percent negative impact from currency and a 1 percent net reduction from portfolio changes. Weaker demand across most markets led to significantly lower global sales volume. Local pricing gains in all regions and in all segments were more than offset by declines in volume and unfavorable currency. The table below shows worldwide and regional sales performance of fourth quarter 2008 versus fourth quarter 2007.
Net loss for the fourth quarter 2008 was $629 million versus income of $545 million in the prior year. Excluding significant items, fourth quarter 2008 net loss was $249 million versus income of $522 million in the prior year.
Business Segment Performance
DuPont delivered $425 million in fixed cost reduction programs in 2008, which surpassed the original goal of $400 million. Each business segment has taken additional actions in the fourth quarter to reduce cost and capital in line with demand. The actions include: surpassing the goal of eliminating 4,000 contractors by the end of December; redeploying resources to working capital reduction projects; addressing underperforming assets; broad-based supplier negotiations; and delivering on restructuring milestones.
Additional information on segment performance is available on the DuPont Investor Center website at www.dupont.com.
Outlook
The company expects that global macroeconomic conditions for first quarter 2009 will be similar to fourth quarter 2008, with very weak demand in most of the company’s key markets, excluding agriculture. Earnings growth for the Agriculture & Nutrition segment is expected to be more than offset by lower earnings in the other segments. DuPont expects first quarter 2009 earnings to be in the range of $.50 to $.70 per share.
For 2009, the company’s earnings outlook is a range of $2.00 to $2.50 per share, anticipating that the current global recession will continue in 2009. While favorable conditions in global agriculture markets are expected in 2009, lower demand for non-agriculture products and the impact of currency is expected to limit the company’s revenue growth. The company expects to continue an appropriate level of spending for high-growth, high-margin businesses, including seed products and photovoltaics.
“We are acutely focused on executing with a sense of urgency across the company,” Kullman said. “To enhance our strong financial position, we implemented additional cash-generating actions during the fourth quarter, including reduced spending and restructuring to better align capital expenditures and costs with lower global demand. For 2009, we will deliver about $730 million in fixed cost reductions and about $1 billion in reduced working capital, and we will capitalize on opportunities that emerge in the current environment.”
DuPont is a science-based products and services company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; building and construction; communications; and transportation.
