Chemical reaction

27 January 2015 By Kevin Allison

The $67 bln chemical giant is promising more cuts and a bigger buyback to fend off the activist investor. But it’s already barely hitting estimates. A stronger dollar and falling commodity prices will make that even harder in 2015. DuPont boss Ellen Kullman is on the back foot.

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Chemical maker DuPont raised its cost-savings target by 30 percent and unveiled fresh plans to buy back up to $4 billion of stock as it announced its fourth-quarter and full-year 2014 results on Jan. 27.

The measures came a few weeks after activist investor Nelson Peltz’s Trian Fund Management revealed it was seeking four seats on the company’s board.

DuPont reported full-year operating earnings of $4.01 per share in 2014, in line with a previously lowered forecast. It said it expected 2015 operating earnings of $4 to $4.20 per share, including earnings from its performance chemicals unit, which it plans to spin off.

That was below the average analyst forecast of $4.46 per share, according to Thomson Reuters I/B/E/S.

The $67 billion chemical maker said it would aim for a further $300 million of annual cost savings on top of an existing target of $1 billion.

It said it would use a dividend expected from the spinoff of performance chemicals to buy back up to $4 billion of the company’s own shares over the 12 to 18 months following the separation.

DuPont’s shares fell 3.2 percent in early trading after the earnings announcement.

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