DUPONT FIBER INCOME DROPS
Byline: Scott Malone
NEW YORK — DuPont’s first-quarter 2002 earnings broke out the results of its newly created DuPont Textiles & Interior business, showing a severe slide in the group’s profitability compared with prior-year results.
However, the Wilmington, Del.-based company said results had improved since the fourth quarter and held out hope that the overall manufacturing picture is beginning to improve.
“We are bullish with small horns, with respect to our materials and chemicals business,” Ann Gualtieri, vice president of investor relations, said on a conference call with analysts. “Business conditions remain difficult, but in the first quarter DTI showed stabilizing volumes for the first time in more than a year. Excluding the effect of polyester businesses sold to Alpek last year, volumes were flat in the first quarter of 2001. That’s a positive sign, compared to the double-digit declines of last year.”
Aftertax operating segment for the DTI unit, which the company plans to spin off by the end of 2003, was $19 million for the quarter ended March 31, down 70.3 percent from $64 million. The results included a $29 million charge to withdraw from a Chinese polyester joint venture and a $19 million gain that resulted from a litigation settlement as DuPont exited a nylon joint venture in that country.
DuPont has been backing away from the highly competitive polyester business for the last few years. It has, however, been stepping up its investment in manufacturing of spandex and nylon in China without a joint venture partner, as reported.
Overall sales for the unit were down 14.6 percent in the quarter to $1.45 billion. DuPont attributed 11 percent of that decline to price deterioration and 4 percent to volume decline.
Gualtieri said spandex sales — measured by poundage, not price — rose at a double-digit percentage rate in the quarter, and added that she expects the slide in generic spandex prices to stabilize.
“Overall, it seems to us that clearly the generic price has pretty much stabilized,” she said. “We foresee there will continue to be some declines in the branded price because there is a huge premium.”
DuPont produces unbranded generic spandex, as well as Lycra spandex.
Gualtieri added that overall apparel manufacturing in Asia, where the unit generates about a quarter of its sales, “appears to be picking up.”
Overall, DuPont recorded net income of $479 million, or 48 cents a diluted share, down 3.2 percent from $495 million, or 47 cents a share, in the prior-year quarter. Net revenues were down 11.8 percent, to $6.2 billion.
The company said underlying earnings per share — excluding one-time items — would have been 55 cents a share, a penny above last year’s figure, but a penny below the Thomson Financial/First Call consensus, which reflected analysts’ revised estimates since the company raised its earnings forecast early this month.
DuPont’s annual meeting of shareholders is to be held in Wilmington today.