By Jacob Bunge And Chelsey Dulaney
DuPont Co. trimmed its earnings outlook for the year on weakness
in agricultural business and exchange-rate fluctuations, a setback
after the company repelled an activist attack this year focused
partly on complaints about DuPont missing its financial
targets.
DuPont on Tuesday said profit in its latest quarter fell 12%, as
weak pesticide sales, reduced corn planting in Latin America, and
tepid soybean volumes weighed on its agricultural business. The
maker of Pioneer corn seeds and Kevlar fibers also continued to
grapple with the U.S. dollar's strength, which reduced the value of
overseas sales across all of DuPont's divisions.
"There's an industrywide challenge this year," DuPont Chief
Executive Ellen Kullman said in an interview.
DuPont's move Tuesday to lower its profit guidance comes after
activist investor Trian Fund Management LP failed in May to secure
seats on DuPont's board. Following that battle, Trian predicted
DuPont would miss profit targets it outlined earlier in the year.
Trian has held on to its 24.6 million DuPont shares, representing
about 2.7% of DuPont's stock, and said in June it would "closely
monitor" DuPont's performance.
DuPont is now forecasting operating earnings of $3.10 a share,
down 10 cents from the low end of its previously forecast range.
The total excludes 80 cents from its former performance-chemicals
division that it recently spun off. Earlier this year DuPont
forecast profits between $4 and $4.20 a share, and in April said
that earnings would likely come in at the low end of that
range.
Ms. Kullman said that DuPont continues to engage with Trian, and
that an early July meeting with Trian Chief Executive Nelson Peltz
was constructive. The discussion, which followed Trian's loss in
the proxy contest, focused on growth opportunities, improving
DuPont's productivity, and how the company allocates capital, she
said.
"Time will tell" whether Trian revives its push for change at
DuPont, such as by nominating another director slate, Ms. Kullman
said.
A Trian spokeswoman declined to comment on DuPont's results.
Shares of DuPont were about 0.9% lower in midday trading after
hitting a two-year low earlier Tuesday. The stock is now down
around 24% this year, and has declined about 25% since Trian lost
the proxy contest in mid-May.
In January, DuPont increased cost-cut targets and said it would
reach its goal of slashing $1 billion in costs by the end of 2015,
ahead of schedule. In the latest quarter, DuPont said cost cuts
added 10 cents to per-share operating earnings, and executives said
Tuesday they were looking for more ways to reduce expenses.
For the quarter, which ended June 30, DuPont reported a profit
of $940 million, or $1.03 a share, down from $1.07 billion, or
$1.15 a share, a year earlier.
Excluding special items, operating earnings ticked up to $1.18 a
share from $1.17 a share a year ago.
DuPont's second-quarter sales fell 11% to $8.6 billion, and
officials estimated that currency impacts brought down sales by 5%
in the quarter.
Analysts polled by Thomson Reuters had expected a profit of
$1.18 a share and net sales of $8.75 billion.
Agricultural sales, which represented about 37% of total sales
for DuPont, fell 11% to $3.22 billion amid a 6% drop in volume and
a 5% currency impact. Operating profit fell 7% to $778 million,
propped up by cost cuts and price increases from new products.
DuPont earlier this month completed the spinoff of Chemours Co.,
which makes paint pigments and nonstick coatings for frying pans.
That division posted $1.5 billion in revenue and $113 million in
operating earnings in the latest quarter, both representing
double-digit declines from the prior year.
As a result of the separation, DuPont said it now plans to
purchase and retire $2 billion in stock by the end of the year.
Write to Jacob Bunge at jacob.bunge@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com