DUPONT TO CUT NYLON FIBER SPENDING
Byline: Scott Malone
NEW YORK — DuPont’s reorganization of its fibers operations is now extending to nylon.
The company said Wednes-day that it plans to reduce spending on its nylon fibers and intermediates business by about 50 percent from its 1997 peak, to exit unspecified nylon joint ventures and to postpone or cancel more than $600 million in planned capital projects for the Asia-Pacific region.
The company spent about $600 million on the nylon business in 1997, according to a spokesman.
A statement issued by the company described the moves as “part of its shift in strategy for the nylon business to selective growth with a more intense focus on improving profitability, reducing capital intensity and increasing free cash flow.”
DuPont also said it expects to take a one-time noncash after-tax charge of up to 35 cents per share in the third quarter as a result of these steps. The First Call analyst consensus estimate for the quarter had been 58 cents per share.
In the third quarter of 1998, DuPont — after hefty charges for nonrecurring items — posted a net loss of $605 million, or 54 cents a share.
In March, the Wilmington, Del.-based company announced it wanted to make its polyester and nylon businesses less capital intensive and less subject to cyclical market swings. That goal has resulted in a spinning off of most of the company’s wholly owned polyester operations into joint ventures. Wednesday’s announcement was the first indication of how that goal would be implemented in the nylon area.
The company currently has five Asian nylon joint ventures. In Taiwan it makes nylon filament for the apparel market in a joint venture with Far Eastern Textile, and in Japan it makes nylon fiber for various applications with Teijin. In India and Indonesia it has joint ventures that produce nylon tire fabric, while in China it has a joint venture which produces a nylon intermediate.
The spokesman said the company has not yet determined exactly which joint ventures it will be exiting.
For the six months ended June 30, DuPont’s nylon enterprise recorded after-tax operating income of $206 million, on sales of $2.25 billion.
In Wednesday’s trading on the New York Stock Exchange, DuPont shares closed down 4 at 62 1/8.