NEW YORK — Special items and other factors helped offset noncash pension expenses and higher raw material costs at DuPont’s Textiles & Interiors division to allow the firm to post earnings and sales growth in the second quarter.
This story first appeared in the July 30, 2003 issue of WWD. Subscribe Today.
For the three months ended June 30, the Wilmington, Del.-based fibers and chemical giant reported a 24.3 percent jump in net income to $675 million, or 67 cents a diluted share. By comparison, last year the company had profits of $543 million, or 54 cents. Excluding special gains in this year’s quarter and one-time charges in the year-ago period, earnings per share would have been 62 cents versus 71 cents, respectively. However, DuPont eclipsed the Wall Street consensus forecast by 10 cents.
DuPont said currency translation and a lower effective tax rate also aided the bottom line.
Net revenues for the quarter grew 11.7 percent to $7.52 billion from $6.73 billion a year ago.
DTI swung back to recording operating profits of $17 million, an improvement over last year’s $50 million loss. The most recent quarter, however, included a $10 million benefit from an arbitration settlement with Unifi Inc., while the prior-year period included charges accruing to $209 million for restructuring activities. Excluding those items in both quarters, DTI’s operating income plunged 92.5 percent to $7 million from $93 million a year ago. DuPont said operations reflected significantly higher raw material costs and noncash pension expenses, partly offset by reductions in cash fixed costs.
DTI’s sales increased 5.8 percent to $1.78 billion from $1.68 billion, but excluding a change in reporting for intersegment transfers — primarily to the performance materials division — sales actually dipped 2 percent.
DuPont is fast approaching its self-imposed end-of-the-year deadline to sell or spin off its $6.3 billion DTI unit. As reported, Koch Industries, the Wichita, Kan.-based petroleum company, is believed to be the leading candidate to buy DTI. Company officials insist they are still considering all available options to rid themselves of the largest company in the rapidly changing synthetic fiber industry, but there is still no indication of an imminent move.
“While we continue to be on track with all of the separation activities for DTI,” said chief financial officer Gary Pfeiffer on a conference call with analysts, “we haven’t made a decision on the separation mechanism. We are still on track with our previous guidance to separate by the end of the year, market permitting.”
As part of that process, as reported, DTI in February started operating as a stand-alone business within DuPont, and last month DuPont bought back the minority shares in DuPont Canada it had not already owned to allow it to merge some Canadian fiber operations into DTI.
Overall, for the first half of the fiscal year, DuPont reported net income of $1.21 billion, or $1.21 a diluted share. That compares with last year’s loss of $1.92 billion, or $1.93. Excluding an accounting change in both years’ periods, net income would have increased 21.2 percent to $1.24 billion, or $1.24, from $1.02 billion, or $1.01.
Net revenues for the six months rose 13.7 percent to $14.7 billion from $12.92 billion a year ago. At the DTI unit, sales gained 12.1 percent to $3.5 billion from $3.12 billion, with operating income of $12 million versus last year’s loss of $30 million. Excluding special items year over year, the segment’s operating income dropped 98.4 percent to $2 million from $123 million last year.