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.

Context News

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.

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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