DUPONT FIBERS UNIT PROFITS GAIN 30% IN FIRST QUARTER
NEW YORK — At DuPont’s fiber unit, earnings gained 30 percent gain in the first quarter to $233 million from $179 million, reflecting, in part, strong demand in most market segments.
Year-ago fiber figures included a $32 million charge primarily for severance costs in the U.S.
Fiber sales for the three months ended March 31 rose 10 percent, reflecting 11 percent higher volume, partly offset by 1 percent lower prices.
In a statement, John Krol, president and chief executive officer, noted that fiber’s results were a “near-record.” The gain in fibers and record results in DuPont’s petroleum business, “together with continued control over costs, enabled us to maintain strong earnings growth,” he said.
In a conference call, DuPont executives said that while raw materials prices have come down from the highs of last year, better demand has only just begun to boost depressed fiber prices.
“We saw a peaking of paraxylene costs [a key component of polyester] that were much higher in the latter part of last year than they are today,” said John Himes, vice president of investor relations. “But year over year, polyester staple prices are down substantially, probably 15-plus percent.” He added that DuPont expects raw materials prices to remain constant in the months to come.
“What is encouraging is that we are sold out in some places, and we are beginning to see some positive price movement,” said Kurt Landgraf, chief financial officer, who was also on the call. Landgraf noted there was a first-quarter spike in nylon costs due to sharply higher prices for natural gas and other raw materials, but by the end of the quarter prices had returned to the lower levels of the latter part of 1996.
Asked whether DuPont would be prepared to raise polyester prices, as Trevira has announced it will do May 5, Landgraf said the company “was still studying the situation. No decision has been made yet, to my knowledge.”
All DuPont’s segments are under pressure to meet Krol’s mandate of 12 percent cost-of-capital returns, but Landgraf said fibers has already comfortably cleared that hurdle. “Fibers is well above that figure,” he said. “It is one of the healthiest and strongest parts of the company.”
Overall, DuPont’s earnings gained 16 percent to $1.02 billion, or $1.80 a share, from $879 million, or $1.57 a share. Year-ago figures included restructuring charges of $53 million for its chemical and fiber units.
Total sales rose 4.1 percent to $11.2 billion from $10.8 billion.