DD DuPont de Nemours Inc

By Jacob Bunge 

DuPont Co. stepped up its cost-cutting efforts as slowing growth in developing countries and the strengthening U.S. dollar continued to challenge to the maker of seeds and chemicals, underlining forces driving its merger with rival Dow Chemical Co.

Wilmington, Del.-based DuPont said it now plans to cut $730 million in expenses this year after announcing a broad restructuring plan in December that will eliminate about 5,000 jobs in an effort to improve profits and hasten integration with Dow, executives said. That is up from a December projection of $700 million in 2016 cost reductions.

"We are obviously moving as rapidly as we can," DuPont Chief Executive Ed Breen said on a conference call Tuesday.

DuPont, which makes products including pesticides and building materials, swung to a loss in its latest quarter as revenue fell across all segments. Sales were particularly hard-hit abroad due to rising the dollar, which has gained nearly 25% against a basket of foreign currencies in the past 18 months, making U.S. products more expensive overseas.

Slowing sales in emerging markets also meant that more of DuPont's profits were generated in countries with higher tax rates, further pressuring earnings, Chief Financial Officer Nick Fanandakis said.

DuPont's near-term outlook for China, where economic concerns have rattled global markets, is "mixed," as declining fourth-quarter sales in DuPont's electronic products were offset by higher volumes in food-ingredient and health products, Mr. Breen said in an interview. China presents longer-running challenges as the country's economy shifts from industrial to service and consumer sectors, Mr. Fanandakis said on the conference call.

Under Mr. Breen, who assumed leadership at DuPont in October 2015, DuPont has accelerated cost reductions to cope with a slumping agriculture sector, where three years of declining crop prices have squeezed farmers who buy crop seeds and pesticides. Sales in DuPont's agriculture segment--its largest--fell 11% in the fourth quarter. The 213-year-old company also is grappling with a broader collapse in commodity prices that has cooled growth in many of the developing countries where DuPont sells industrial products.

For the quarter ended Dec. 31, DuPont reported a loss of $253 million, or 29 cents a share, from a profit of $683 million, or 74 cents a share, a year earlier. Excluding certain items, per-share earnings fell to 27 cents from 57 cents. Sales slid 9.4% to $5.3 billion. Without currency effects, the drop would have been 1%, the company said. Analysts projected 26 cents in adjusted earnings per share on $5.53 billion in revenue, according to Thomson Reuters.

DuPont shares, down 12% over the past three months through Monday's close, were 1.2% higher in midday trading Tuesday in New York.

The company on Tuesday forecast it would earn $2.95 to $3.10 a share in 2016, including a higher-than-anticipated 64 cents a share in cost savings. Analysts surveyed by Thomson Reuters have predicted $1.31 in adjusted per-share profit this year. Previous moves to cut expenses added 10 cents to DuPont's fourth-quarter results, the company said.

Mr. Breen said that DuPont and Dow have formed teams to work on aspects of the merger deal, which would create a company with a current combined market capitalization of about $96 billion before splitting into three separate, publicly traded companies. Executives are analyzing ways to meld warehouse and computer networks while setting up financial reporting frameworks of the three spinoffs, Mr. Breen said.

Executives likely will choose a headquarters for the combined agriculture business in the next few weeks, Mr. Breen said. Officials representing Des Moines, Iowa, the longtime home of DuPont's Pioneer seed division, and Indianapolis, home to Dow's agriculture unit, are angling to land the agriculture company's headquarters.

Executives expect the industrial materials company to be based in Dow's hometown of Midland, Mich., and the specialty products company, which will produce electronic components and food ingredients, to remain in Wilmington, Del., DuPont's base for two centuries.

Lisa Beilfuss contributed to this article.

Write to Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

January 26, 2016 12:41 ET (17:41 GMT)

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