DuPont Co, the No 2 US chemical maker, on Tuesday said quarterly profit fell after taking charges of $302 million for jobs cuts and the sale of its carpet and textiles business, But quarterly sales rose and the company increased its full-year earnings outlook, citing slower but continued growth in industrial production.
Shares of the company, a component of the Dow Jones industrial average, fell 0.9 percent in early trade.
The Wilmington, Delaware-based company posted second-quarter net income of $503 million, or 50 cents per share, compared with $675 million, or 67 cents per share, a year earlier.
The charges, which amounted to 30 cents per share and included a reserve for Teflon litigation, caught some analysts off guard.
"That was a little bit of a surprise," said Gene Pisasale, investment officer with Wilmington Trust Co, who nonetheless was encouraged by sales growth at DuPont's main businesses - coatings, electronic materials, plastics, farm chemicals and safety materials.
"We're looking for consistent, long-term, sustainable growth and hopefully with the platforms in place right now they're ready to move in that direction," he said. His firm owns DuPont shares and manages about $26 billion in assets.
Second-quarter charges mainly covered severance costs from the elimination of about 2,700 jobs. They also included costs from the $4.1 billion sale of its fibers business, INVISTA, to Koch Industries Inc in April.
The staff reductions are part of a $900 million cost-cutting program announced in late 2003 to combat the high costs for natural gas and oil, which DuPont needs to run its plants and make chemicals.
Other costs included $45 million to set up a reserve for a West Virginia class-action lawsuit that claims a Teflon-related chemical polluted local water. DuPont makes the popular coating used in cookware and clothing.
Before charges, DuPont earned 80 cents per share, below analysts' average forecast of 81 cents, according to Reuters Estimates.
Overall sales rose 2 percent to $7.5 billion, led by plastics, packaging and electronic materials.
Looking ahead, DuPont raised its 2004 earnings forecast to between $2.25 and $2.35 per share, from a prior range of $2.10 to $2.30. It also said that third-quarter earnings would account for about 40 percent of second-half profits.