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Published June 27, 2014, 10:07 AM

DuPont cuts profit forecast on slow sales in farm business

Chemicals maker DuPont cut its operating profit forecast for the second quarter and the full year, saying sales in its agriculture and performance chemicals units increased at a slower pace than it had expected.

By: Reuters,

Chemicals maker DuPont cut its operating profit forecast for the second quarter and the full year, saying sales in its agriculture and performance chemicals units increased at a slower pace than it had expected.

The company’s shares fell about 4 percent in extended trading.

DuPont has been focusing on its agriculture business, its biggest, for the past few quarters.

The company, however, reported a rare quarterly decline in sales at this unit in April as farmers in North America delayed purchases because of an unusually harsh winter.

DuPont had then said it expected “significant” growth in the unit’s operating earnings in the second quarter ending June 30.

The company says corn seed sales in its farm business were lower than expected, while seed inventory write-downs were higher than anticipated.

The harsh winter also hit herbicide sales, the company says.

DuPont says it expects operating profit for the current quarter to fall moderately from $1.28 per share a year earlier.

The company cut its operating profit forecast for the year ending Dec. 31 to $4 per share from $4.10.

Analysts were expecting an operating profit of $1.46 per share for the second quarter and of $4.30 per share for the full year, according to Thomson Reuters I/B/E/S.

DuPont expects operating earnings in its agriculture business to fall in low teens in percentage terms in the second quarter, the company says.

Corn pricing in North America is expected to be a bit lower than its previous estimate, the company says.

DuPont says it expected returns of unused corn seeds in Brazil to be higher than it had anticipated.

Lower refrigerant selling prices and weaker sales of floor chemicals also hurt DuPont’s performance chemicals business, which is in the process of being hived off.

The spinoff is part of the company’s strategy to move into less volatile businesses. The chemicals unit has weighed on DuPont’s results since 2012, mainly because of weak prices for a white pigment used in toothpastes, sunscreen and other products.

The company also says it expects to record a pretax restructuring charge of about $270 million, or 20 cents per share after tax, in the second quarter.

A number of chemical companies, including Dow Chemical Co., have come under investor pressure to raise shareholder returns by spinning off less stable units.

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