WEAK SALES SEND DUPONT NET DOWN 38%
Byline: S. Gray Maycumber
NEW YORK — The global economic slowdown was not kind to DuPont, which on Tuesday reported that all fiber business segments had lower first-quarter sales and earnings, compared to a year ago.
In the quarter ended March 31, net income plummeted 38 percent to $495 million, or 47 cents a diluted share, compared with $803 million, or 76 cents, in the year-ago period. Excluding one-time items, income was $567 million, a 37 percent drop, compared with $898 million. Sales fell 9 percent to $6.86 billion from $7.6 billion.
The company said that, based on demand signals, it expects that the global economic slowdown will similarly impact the manufacturing sector through the second quarter and perhaps into the second half of 2001.
Earnings for the nylon segment plunged 86 percent to $12 million from $87 million. Sales were $960 million, down from $1.11 billion. The company said that the drop was the result of a 40 percent increase in raw material costs, mostly related to natural gas, a 15 percent decrease in volume and a less favorable product mix. Lower apparel and flooring volumes were also cited.
The polyester business reported an $8 million loss against earnings of $9 million last year. Sales were down 4 percent to $545 million from $567 million. “Continued depressed conditions in worldwide fibers markets, lower prices and higher raw material and energy costs,” were the reasons for the decline, the company said.
The specialty fibers segment, usually a strong profit source, posted a 22 percent drop in earnings to $156 million from $201 million in last year’s same quarter. Sales were down 5 percent to $858 million from $905 million. Earnings growth from the Advanced Fiber systems only partly offset lower Lycra spandex earnings, which the firm said were adversely affected by lower U.S. dollar prices, higher raw material costs, and lower volume. Earnings from the nonwovens segment, usually profitable, were flat on modestly higher sales, the company said.
In Tuesday’s conference call with analysts, Gary Pfeiffer, chief financial officer, noted that specialty fibers were hit by “excess capacity in Europe and high oil prices.” He added that there may be a “moderation in the decline in Lycra pricing. Some generic competition are barely covering their costs.”
He also noted that “overcapacity in polyester, particularly in Asia,” has been a problem. Pfeiffer said he saw the second quarter as similar to the first. He indicated that DuPont was in the process of reducing capacity.