DuPont provides Q4 earnings guidance, to cut 2500 jobs
DuPont announced further actions to address current market challenges and strengthen the company's competitiveness in 2009, including continued focus on maximizing cash flow and provided earnings guidance for the fourth quarter 2008 and the full year 2009.
A steep global decline in construction and motor vehicle sales and consumer spending has resulted in declining industrial production, intensified by inventory reductions across most supply chains. These conditions have precipitated a sharp downturn in demand during the fourth quarter.
“We have taken immediate and aggressive actions to maximize cash flow by reducing cost, working capital and capital expenditures in response to current market challenges,” said DuPont Chairman and CEO Charles O. Holliday, Jr.“We will build on our strong financial and market positions and continue prudent financial discipline in navigating through this challenging economic environment.
We are providing 2009 earnings guidance and underlying assumptions in our effort to be as transparent as possible with respect to the current and expected impact of the global recession. We are, however, realistic about the potential for further change and we will adjust actions as conditions warrant.”
* Full-year 2008 free cash flow is expected to be about $1.3 billion, as planned, with working capital improvements offsetting earnings decline. Free cash flow will increase to about $2.5 billion in 2009, reflecting a planned $1 billion net working capital reduction and a 10 to 20 percent reduction in capital spending.
* DuPont is taking actions to deliver in 2009 $600 million in fixed cost productivity improvements, excluding volume and currency, in addition to about $130 million in cost reductions from its restructuring plan. This compares to an original 2009 cost productivity plan of $200 million.
* DuPont has commenced a restructuring plan with an associated pre-tax charge of about $500 million in the fourth quarter resulting in a pre-tax earnings increase of about $130 million for 2009, and approximately a $250 million annual run rate.
* The company expects a loss of $.20 to $.30 per share for the fourth quarter 2008, excluding an estimated $.40 per share significant item charge for the company's restructuring plan. On a reported basis, the company expects fourth quarter earnings to be a loss of $.60 to $.70 per share.
* Full-year 2009 earnings are expected to be about $2.25 to $2.75 per share.
DuPont's plan is intended to better position a number of its market-leading global businesses for future growth.
Approximately 2,500 employee positions will be eliminated, principally in businesses that support the motor vehicle and construction markets in Western Europe and the United States. In addition, certain assets will be rationalized to improve future competitiveness. A pre-tax charge totaling approximately $500 million, or $.40 per share, will be taken in the fourth quarter 2008 for the restructuring plan. These actions are expected to produce a pre-tax earnings increase of about $130 million for 2009 and about a $250 million annual run rate.