DuPont's (DD) Earnings Top, Sales Trail Estimates In Q2

DuPont de Nemours, Inc. (NYSE:DD) recorded loss (on a reported basis) from continuing operations of $1.48 per share for second-quarter 2019 against earnings of 3 cents per share in the comparable quarter a year ago. The bottom line in the reported quarter was hurt by goodwill impairment and income tax charges.

Barring one-time items, earnings were 97 cents per share for the second quarter, outstripping the Zacks Consensus Estimate of 86 cents.

DuPont raked in net sales of $5,468 million, down around 7% from the comparable quarter a year ago. It missed the Zacks Consensus Estimate of $5,641 million.

Net sales fell 3% on an organic basis as 2% higher pricing was more than offset by 5% lower volumes. Currency and portfolio headwinds lowered sales by 3% and 1%, respectively.

DuPont, which was formerly known as DowDuPont Inc., started trading as a stand-alone company on Jun 3, 2019 following the separation of its Agriculture division through the spin-off of Corteva, Inc.

Segment Highlights

The company’s Electronics & Imaging segment recorded net sales of $858 million in the quarter, down 7% on a year over year comparison basis. Organic sales fell 5%, affected by lower volumes. Higher volumes in display technologies were more than offset by lower volumes in semiconductor technologies and interconnect solutions.

At the Nutrition & Biosciences unit, sales fell 4% to $1.6 billion. Organic sales were flat year over year as 1% higher pricing was offset by 1% lower volumes. Higher volumes in health & biosciences were more than offset by weaker volumes in food & beverage and pharma solutions businesses.

Net sales for the Transportation & Industrial division were $1.3 billion in the reported quarter, down 10% year over year. Organic sales fell 7% as 5% higher pricing was more than offset by a 12% decline in volumes due to lower autobuilds (mainly in China), soft electronics demand and de-stocking in automotive and electronics channels.

Net sales in the Safety & Construction unit were $1.3 billion, down 2%. Organic sales rose 5% on the back of a 4% price improvement and a 1% volume gain. High-single digit volume improvement in the water solutions business was masked by reduced volumes in the shelter solutions business due to continued weakness in residential construction demand in North America.

Foe the non-core reporting segment, net sales fell 16% to $442 million. Organic sales declined 14%, impacted by lower volumes. Volume fell due to weak demand for trichlorosilane.

Financials

DuPont had cash and cash equivalents of $1,661 million at the end of the quarter. Long-term debt was $15,608 million.

Outlook

DuPont raised its adjusted earnings per share guidance to the range of $3.75-$3.85 for 2019. It, however, sees organic sales for the year to be modestly down from last year. The company expects weak demand in its short-cycle businesses to continue in the second half.

The company benefited from its cost and pricing actions in the second quarter and noted that it is driving additional cost actions in the second half.

Price Performance

DuPont’s shares are down around 5.2% since it started trading on the NYSE, compared with the roughly 4.4% rise recorded by the industry.

Zacks Rank & Key Picks

DuPont currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks worth considering in the basic materials space include Arconic Inc. (NYSE:ARNC) , Israel Chemicals Ltd. (NYSE:ICL) and Flexible Solutions International Inc (NYSE:FSI) .

Arconic has an estimated earnings growth rate of 38.2% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have moved up 17% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2 (Buy). Its shares are up roughly 7% in the past year.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current fiscal year and carries a Zacks Rank #2. Its shares have surged around 96% in the past year.

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