SAN FRANCISCO — DuPont has apparently taken another step in preparing its fibers business for a spin-off or sale by pumping up its management.
This story first appeared in the April 30, 2003 issue of WWD. Subscribe Today.
According to industry sources, DuPont is expected to name Steve McCracken president of the full $6.3 billion division, broadening his responsibilities to also cover intermediates. McCracken is currently president of the fibers business at Wilmington, Del.-based DuPont Textiles & Interiors. The announcement could come as early as today.
Sources also said Richard Goodmanson, a DuPont vice chairman who had served as president of the DTI division since its creation early last year, will become nonexecutive chairman of the division and return to his duties at DuPont.
In a related move, George McCormack, who had served as head of DTI’s intermediates business, is expected to be named group vice president of strategic projects at DuPont and will return to the main company.
As nonexecutive chairman, Goodmanson would run DTI’s board, which includes McCracken, DuPont chairman and chief executive officer Charles Holliday and DuPont chief financial officer Gary Pfieffer.
Separately on Tuesday, DuPont said that higher volume, favorable currency exchange rates and year-ago charges put it back into the black in the first quarter, although the effect of charges pulled DTI into the red. It also warned that second-quarter earnings would miss Wall Street estimates due to weak industrial demand, especially in its chemicals business. Shares gained 64 cents, or 1.5 percent, to close at $42.37 in New York Stock Exchange trading Tuesday.
Since early this year, DTI has been operating as a wholly owned, independently structured, unit of DuPont. DuPont plans to spin off the DTI business by the end of the year.
As reported, DuPont this month acknowledged having talks with an unnamed company to sell DTI, which includes its spandex, nylon and polyester operations. At that time, executives said DuPont is still considering selling off DTI through an initial public offering. Sources have said the unnamed company is Wichita, Kan.-based chemical giant Koch Industries, but there’s no confirmation on that from DuPont or Koch.
For the three months ended March 31, DTI had an aftertax operating loss of $5 million, as a $29 million charge to withdraw from a polyester joint venture in China more than offset a $19 million gain from a litigation settlement associated with DTI’s exit from a nylon joint venture, also in China. That reversed last year’s $20 million profit.
However, DTI, DuPont’s second-largest division, produced the greatest growth as sales climbed 19.3 percent to $1.72 billion from $1.44 billion. Sales benefited from volume growth of 5 percent and a 6 percent higher U.S. dollar selling price.
In the quarter, DuPont reported net income of $535 million, or 53 cents a diluted share. That compares with last year’s loss of $2.47 billion, or $2.46. Excluding charges for a change in accounting principle in both year’s periods, DuPont would have posted earnings of $564 million, or 56 cents, versus $479 million, or 48 cents a year ago. Earnings per share exclusive of the charges beat the Wall Street estimate by 2 cents.
Sales grew 15.9 percent to $7.19 billion from $6.2 billion last year. DuPont said the higher sales floated on a 7 percent increase in sales volume as well as a 6 percent beneficial impact from a weaker U.S. dollar overseas.
“Our sales growth in the first quarter reflects strong volume increases in each of our five growth platforms and DuPont Textiles & Interiors,” said ceo Holliday in a statement. “This broad-based volume growth, combined with particularly strong results in pharmaceuticals; agriculture and nutrition, and safety and protection, offset the impact of higher pension, energy and raw material costs in the first quarter.”