U.S. APPAREL SOFT, BUT NET UP AT DUPONT FIBER UNIT
Byline: Thomas L. Ryan - with contributions from S. Gray Maycumber
NEW YORK--Despite a soft apparel business in the U.S., DuPont said operating profits for its fibers sector rose 17.5 percent in the second quarter before a special credit. DuPont's management said the apparel weakness in the U.S. is being offset by strength in Europe and Asia. In the quarter ended June 30, fibers earnings before the credit increased to $208 million, from $177 million a year earlier. With the $27 million credit for adjustment of estimates associated with the third quarter of 1993 restructuring charge, fiber's net operating earnings in the latest quarter were $235 million. Fibers sales gained 6.4 percent to $1.83 billion from $1.72 billion. Selling prices rose 6 percent while volume was about even with last year. In a conference call to press, John Himes, vice president of investor affairs, said apparel fibers business in the U.S. was generally sluggish. "I think the retail apparel business in the U.S. was one of the market segments that has been under tremendous pressure," he said. Himes said some nylon products have been hurt by weakness in the carpet business as well as in apparel in the U.S., although he noted that some nylon products "are doing very well in apparel" in the U.S. Lycra "is improving modestly from a very strong year in 1994, even with the addition of new competitive capacity in the United States," Himes said. He said Lycra is seeing improved retail demand in Europe, Asia and South America to help offset some weakness in the U.S. "That's truly a global business," he said, noting that "only a very small percentage of our Lycra business is in the United States. "The market outside the U.S. continues to make that business oversold," he said. "So if we run into problems of being able to move product through a slowing U.S. economy, we can move those products outside the U.S. at even higher prices than are currently available in the U.S." In a separate telephone interview, Jerald Blumberg, senior vice president, DuPont Fibers, also pinpointed Lycra sales in North America as being "soft." Overall, Lycra sales were "about flat for the quarter. We had good volume in Europe....We did OK on balance," he said. Turning to other fibers, Blumberg said, "We got increased Dacron polyester volume from the new Kinston, N.C., [plant] expansion and this helped to push sales up. We also got an improvement in selling prices of Dacron, which was a reversal of past price drops. But this mainly covered increased raw material costs. Polyester volume is strong and the outlook is good. "Textile nylon is a very good story," Blumberg continued. "Apparel nylon was strong in sales. This was helped by hosiery, socks and athletic wear. Until the July mill shutdown, business was very strong. We were oversold in some segments and could have sold more if we had the production. We also benefited from upward price movements, but again this mostly went to cover increased raw material costs." C.L. "Jerry" Henry, chief financial officer, who also participated in the conference, noted, however, that Dacron polyester for apparel is "under a lot of pressure in the U.S." However, he said, overall, polyester "is still going very well" and "should hold up well as we head through the rest of the year." Henry said the U.S. apparel fiber business would be helped by a better U.S. economy, and he noted that DuPont is expecting a "little uptick" in its U.S. business in the fourth quarter. He also projected "continued good growth" in Europe and Asia Pacific in the second half. In the half, fibers profits before the credit increased 28.7 percent to $413 million from $321 million. After the credit, fiber earnings in the latest quarter were $440 million. Sales advanced 9.5 percent to $3.7 billion from $3.4 billion. Overall, DuPont's total earnings rose 18.4 percent to $938 million, or $1.70 a share, from $792 million, or $1.16, a year earlier. Sales rose 9 percent to $11.1 billion from $10.2 billion. In the half, earnings climbed 32.3 percent to $1.9 billion, or $3.07 a share, from $1.43 billion, or $2.10, a year ago. Sales advanced 11.5 percent to $21.6 million from $19.4 billion.
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