DuPont Reports 4Q and Full-Year 2014 Operating EPS of $0.71 and $4.01; 4Q and Full-Year EPS in Line with Company Expectations Despite Macroeconomic Headwinds

WILMINGTON, Del., Jan. 27, 2015 /PRNewswire/ -- DuPont today announced fourth quarter 2014 operating earnings of $0.71 per share compared to $0.59 per share in the prior year.  GAAP¹ earnings from continuing operations were $668 million or $0.73 per share, versus $183 million or $0.19 per share last year.  Fourth quarter results reflect a 20-percent increase in operating earnings per share year-over-year realized from a number of company actions, including strategic portfolio initiatives, continued productivity improvements related to the company's operational redesign, reductions in performance-based compensation, and share repurchases. 

For the full year 2014, DuPont delivered operating earnings of $4.01 per share compared to $3.88 per share in the prior year.  GAAP¹ earnings from continuing operations were $3.90 per share, versus $3.04 per share last year. 

Volume, margins and earnings grew in the majority of segments, despite significant market and macroeconomic challenges, including a weaker Ag economy, a stronger dollar and a difficult market pricing environment.

"Our 2014 results demonstrate continued progress on our strategic plan to deliver higher growth and higher value, including ongoing portfolio refinement through several strategic portfolio actions and steady progress on the planned Chemours separation, substantial cost reductions from our operational redesign and productivity initiatives, and the continued return of capital to our shareholders through $2 billion of share repurchases and an increase in the common stock dividend of 4 percent," Kullman said.  

"Rapid progress in our redesign initiative has enabled us to achieve a $1 billion run-rate target by year end 2015, well ahead of schedule, and we have identified at least $300 million of additional opportunities to streamline our operations and reduce costs.  This initiative remains a priority and we expect to see further results over time," Kullman added.  "In 2015, we remain focused on generating superior returns for our shareholders, including through return of capital from the expected Chemours dividend, while positioning DuPont for our next stage of growth."

Company Increases Cost Reduction Commitment and Outlines Expectations for Return of Capital From Chemours One-Time Dividend

The company has increased its cost reduction commitment from its operational redesign by approximately $300 million to at least $1.3 billion of total expected savings by 2017.  Additionally, by the end of 2015, the company now expects annual run-rate savings of approximately $1 billion, significantly ahead of its previously announced schedule.

In addition the company said it expects to return all or substantially all of the one-time dividend proceeds from Chemours to DuPont shareholders via share repurchases over the 12 to 18 months following the separation of Chemours.  Based on the target BB credit rating of Chemours, this amount is anticipated to be approximately $4 billion, pending the final credit ratings and underlying business conditions for Chemours.

Fourth Quarter Highlights

• Sales were $7.4 billion versus $7.7 billion in the same period last year, down 5 percent primarily due to portfolio changes and negative currency impacts.
• Volume grew in all segments except for Electronics & Communications.
• Segment operating earnings were $1,014 million, reflecting disciplined execution despite macroeconomic headwinds, including a weaker Ag economy and the impact from a stronger U.S. dollar.  
• Cost reductions from operational redesign contributed $0.05 per share to operating earnings in the quarter.

Full Year Highlights

• Sales were $34.7 billion versus $35.7 billion last year, down 3 percent due to weakness in Ag markets, portfolio changes and negative currency impacts.  A 1-percent increase in volume was offset by price.
• Segment operating earnings of $6.0 billion increased 1 percent versus $5.9 billion last year as the negative impact of portfolio changes and currency were more than offset by continued productivity improvements, lower performance-based compensation and gains from business divestitures.
• Continued to execute on our plan to deliver higher growth and higher value for our shareholders:

• Cost reductions from operational redesign contributed $0.07 per share to operating earnings in 2014;
• Completed 10 strategic portfolio actions during the year;
• Completed a $2 billion share buyback; and
• Increased the common stock dividend 4 percent in July 2014.

• The Chemours separation remains on track, as highlighted by the initial Form 10 filing on December 18.

Global Consolidated Net Sales – 4th Quarter

Fourth quarter 2014 net sales of $7.4 billion decreased 5 percent versus last year, reflecting a 4-percent impact from portfolio changes, 1-percent lower local selling prices and a 3-percent negative currency impact, partially offset by 3-percent higher volume.  The table below shows fourth quarter regional sales and variances versus fourth quarter 2013.

Segment Sales – 4th Quarter

The table below shows fourth quarter 2014 segment sales with related variances versus the fourth quarter 2013.

Operating Earnings – 4th Quarter

Global Consolidated Net Sales – Full Year

Full-year 2014 net sales of $34.7 billion decreased 3 percent versus last year, reflecting a 2-percent impact from portfolio changes, 1-percent lower local selling prices and a 1-percent negative currency impact, partially offset by 1-percent higher volume.  The table below shows full-year regional sales and variances versus full year 2013.

Segment Sales – Full Year

The table below shows full-year 2014 segment sales with related variances versus the prior year.

  

Operating Earnings – Full Year

The following is a summary of business results for each of the company's reportable segments comparing fourth quarter with the prior year, unless otherwise noted. References to selling price are on a U.S. dollar basis, including the impact of currency.

Fourth quarter results included about $175 million of year-over-year lower performance-based compensation.  The impact by segment is as follows: Agriculture - $90 million, Electronics & Communications - $10 million, Industrial Biosciences - $5 million, Nutrition & Health - $10 million, Performance Chemicals - $30 million, Performance Materials - $15 million, and Safety & Protection - $15 million. 

Full year results included a year-over-year benefit of about $200 million due to lower performance-based compensation, of which $110 million impacted Agriculture.

Agriculture – Operating earnings of $129 million increased $41 million, or 47 percent. Lower corn seed sales in Brazil and a negative currency impact were more than offset by lower costs, gains from the sale of businesses of $36 million and the timing of seed shipments.

Full year 2014 operating earnings of $2.4 billion decreased $0.1 billion, or 5 percent, on lower corn seed volumes and the negative impact of currency, partially offset by higher crop protection volumes, higher local seed prices, and lower costs, including seed inputs. 

Electronics & Communications – Operating earnings of $97 million increased $4 million, or 4 percent, as lower costs and productivity improvements were offset by lower Solamet^® paste volumes due to the impact of competitive pressures.

Full year 2014 operating earnings of $355 million increased $21 million, or 6 percent, on volume growth and productivity gains, partially offset by the absence of $20 million in OLED licensing income realized during 2013.

Industrial Biosciences – Operating earnings of $49 million increased $9 million, or 23 percent, primarily from improved product mix, lower costs and productivity improvements.

Full year 2014 operating earnings of $211 million increased $42 million, or 25 percent, on increased enzyme demand, principally for ethanol production, and productivity improvements.

Nutrition & Health – Operating earnings of $82 million were essentially flat with prior year as the negative impact of currency and product mix were offset by higher volumes, a gain on termination of a distribution agreement of $18 million, and lower costs.

Full year 2014 operating earnings of $380 million increased $81 million, or 27 percent, from improved product mix, volume growth, productivity and a gain on termination of a distribution agreement of $18 million, partially offset by the negative impact of currency.

Performance Chemicals – Operating earnings of $228 million decreased $2 million as lower prices for titanium dioxide and fluoroproducts were essentially offset by volume increases, lower costs, and a gain from the sale of a business of $23 million.

Full year 2014 operating earnings of $934 million decreased $81 million, or 8 percent, as lower prices for refrigerants, titanium dioxide, and fluoroproducts were partially offset by volume increases, lower costs, and a gain from the sale of a business of $23 million.

Performance Materials – Operating earnings of $332 million increased $38 million, or 13 percent, due primarily to increased ethylene and performance polymer volumes, productivity improvements, and lower costs.

Full year 2014 operating earnings of $1.3 billion were essentially equal to prior year, as increased automotive demand was offset by the impact of the sale of GLS/Vinyls.

Safety & Protection – Operating earnings of $209 million were flat with prior year as lower local prices, currency, and portfolio changes associated with the sale of Sontara^® were offset by increased demand for Nomex^® thermal resistant products, Kevlar^® high strength materials and Tyvek^® protective material, and lower costs.

Full year 2014 operating earnings of $794 million increased $104 million, or 15 percent, from higher volumes driven by increased demand for Nomex^® and Kevlar^®, productivity improvements, and lower product costs, partially offset by lower sales from clean technologies offerings, a negative currency impact, and portfolio changes.

Additional information is available on the DuPont Investor Center website at http://www.investors.dupont.com.

Outlook

The company expects 2015 operating earnings of $4.00 to $4.20 per share, including the full-year outlook for the Performance Chemicals segment.  This estimate includes an approximately $0.60 per share negative currency impact due to the recent strengthening of the dollar based upon an average basket of exchange rates for our business at January 23.  The currency impact is expected to be most significant in the first half of the year due to the seasonality of operating earnings from Agriculture in the northern hemisphere.  In 2015, the company anticipates that the increase in the base tax rate from prior year will be about a $0.15 per share headwind.  The company also expects that the operational redesign will deliver savings of about $0.35 per share in 2015.

The 2015 outlook does not reflect the planned separation of the Performance Chemicals segment or the impact of the expected return of capital related to the separation.

DuPont will hold a conference call and webcast on Tuesday, January 27, 2015, at 9:00 AM EDT to discuss this news release.  The webcast and additional presentation materials can be accessed by visiting the company's investor website (Events & Presentations) at www.investors.dupont.com.  A replay of the conference call webcast will be available for 90 days by calling 1-630-652-3042, Passcode 38251527#.  For additional information see the investor center at http://www.dupont.com.

Use of Non-GAAP Measures

Management believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company.  Such measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D.

DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.  For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.

Forward-Looking Statements:  This news release contains forward-looking statements which may be identified by their use of words like "plans," "expects," "will," "believes," "intends," "estimates," "anticipates" or other words of similar meaning.  All statements that address expectations or projections about the future, including statements about the company's growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized.  Forward-looking statements also involve risks and uncertainties, many of which are beyond the company's control.  Some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; ability to protect and enforce the company's intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses and successful completion of the proposed spinoff of the Performance Chemicals segment including ability to fully realize the expected benefits of the proposed spinoff.  The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

DuPont intends to file a proxy statement with the U.S. Securities and Exchange Commission (the "SEC") with respect to the 2015 Annual Meeting.  DUPONT STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT, THE ACCOMPANYING WHITE PROXY CARD AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

DuPont, its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies from DuPont stockholders in connection with the matters to be considered at DuPont's 2015 Annual Meeting.  Information about DuPont's directors and executive officers is available in DuPont's proxy statement, dated March 14, 2014, for its 2014 Annual Meeting. To the extent holdings of DuPont's securities by such directors or executive officers have changed since the amounts printed in the 2014 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.  More detailed information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with DuPont's 2015 Annual Meeting.  Stockholders will be able to obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by DuPont with the SEC free of charge at the SEC's website at www.sec.gov.  Copies will also be available free of charge at DuPont's website at www.dupont.com or by contacting DuPont Investor Relations at (302) 774-4994.

SOURCE DuPont

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