The largest United States chemical maker DuPont lowered its full-year profit outlook on Friday, a troubling sign for the rest of the chemical market. The company cited slower growth in certain segments because of an unstable global economy as the reasons for the shift.
DuPont said in a release that it now expects a profit of between $3.87 and $3.95 per share, down 10 cents from previous expectations of between $3.97 and $4.05 per share.
In the release, the company said that destocking across polymers and industrial supply chains had sped up during the fourth quarter. In addition, housing and construction markets remains weak, and consumer demand for electronics has even further weakened.
We are seeing slower growth in certain segments during the fourth quarter, driven by global economic uncertainty, DuPont chair and chief executive officer Ellen Kullman said in a statement Friday. This uncertainty is contributing to ongoing conservative cash management in some supply chains.
DuPont follows the recent trend in the chemical industry, as it has seen inventories slide. German chemical maker Wacker Chemie also shrunk its outlook in October.
Analyst Hassan Ahmed, of Alembic Global Advisors, told Reuters the most troubling part of DuPont's revised outlook was that it came after the company had increased it two months ago.
Macroeconomic trends started turning south in the summer, so I was expecting this, he said. But I am concerned because they had upped their guidance in October.
Clearly, things have gone horribly wrong in November and December for them to make this flip-around.
Aside from the issue of destocking and decline in the consumer electronics and housing and construction markets, DuPont said all other markets remain along the company's line of expectations. DuPont cited agriculture and food business as areas of solid growth.
We continue to drive our aggressive productivity initiatives, and, with customer inventories at very low levels, we are staying close to our customers to assure that we are ready to respond when demand returns, Kullman said.
The company said it expects an earnings growth next year. It will hold its annual Investor Day over two days in Wilmington, Del., on Dec. 12 and 13.
Some analysts, though, were skeptical of any potential growth for at least a while. Mark Gulley, an analyst at Triconderoga Securities in New York, told Business Week that any earnings growth in 2012 would be back-loaded.
This certainly is going to last into the first quarter and possibly into the second, Gulley said.
As of noon ET Friday, shares of DuPont had dropped 2.31 points (almost 5 percent) to 44.21.