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May 4, 2021, 1:12 p.m. EDT

DuPont sees a big jump in inflation costs for the rest of the year

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Tomi Kilgore

DuPont de Nemours Inc. jumped on the raw materials inflation bandwagon that many industrial companies have boarded this earnings-reporting season, by saying it expects the impact of raw material inflation for the second quarter to be more than four times what it was in the first quarter.

The specialty materials, chemicals, electronics and agricultural products company /zigman2/quotes/203606582/composite DD -0.30% reported earlier Tuesday first-quarter profit and sales that beat expectations , and raised its full-year outlook.

On the post-earnings conference call with analysts, Chief Executive Ed Breen said that for the first quarter, the impact of raw material inflation was “very little,” at about $20 million.

“We expect in the second quarter, that lists to about $90 million,” Breen said. “And we expect the full-year impact of raw material inflation to be about $300 million.”

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Breen indicated that the company will be able to offset “most” of the second-quarter inflation impact through pricing actions, but not all of it because of the length of certain contracts. But for the year in total, Breen said he was “very confident” that pricing can mitigate the inflation impact.

Overall, he expects pricing to be up in the low-single digits percentage range for the year, including “clearly more” increases in the mobility and materials division, “some price increase” in the water and protection division and “no price increase” in electronics.

DuPont’s stock slipped 0.5% in afternoon trading, to pull back from Monday’s six-week closing high of $78.28. The stock has advanced 9.5% year to date, while the SPDR Materials Select Sector exchange-traded fund /zigman2/quotes/204467551/composite XLB +0.70% has rallied 16.8% and the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.01% has gained 10.2%.

Profit, sales beat expectations

Before Tuesday’s opening bell, DuPont reported that it swung to first-quarter net income of $5.39 billion, or $8.90 a share, from a loss of $616 million, or 83 cents a share, in the year-ago period.

Earnings per share excluding discontinued operations was 89 cents, and adjusted EPS excluding nonrecurring items was 91 cents, above the FactSet consensus of 75 cents. During the quarter, DuPont completed the separation of its nutrition and biosciences business.

Sales rose 8.3% to $3.98 billion, beating the FactSet consensus of $3.85 billion, while the cost of sales also increased 8.3% to $2.51 billion.

Electronics and industrials sales climbed 17% to $1.3 billion, boosted by strength in semiconductors and smartphone technologies, while water and protection sales grew 4% to $1.3 billion, amid strong demand for reverse osmosis and ultrafiltration technologies. For the mobility and materials business, sales increased 11% to $1.2 billion, supported by further recovery in automotive and industrial markets.

“As we emerge from the COVID-19 pandemic, the leading positions we hold in semiconductor, smartphones, automotive, water filtration, and residential construction end markets enabled us to deliver strong first quarter results ahead of expectations with organic sales growth in all three reporting segments,” Breen said. We delivered these results despite headwinds associated with escalating raw material and logistics costs and global supply constraints of key raw materials.”

For 2021, the company raised its adjusted EPS guidance range to $3.60 to $3.75 from $3.30 to $3.45, and lifted its revenue outlook to between $15.7 billion and $15.9 billion from between $15.4 billion and $15.6 billion.

/zigman2/quotes/203606582/composite
US : U.S.: NYSE
$ 74.22
-0.22 -0.30%
Volume: 1.85M
July 23, 2021 4:02p
P/E Ratio
12.98
Dividend Yield
1.62%
Market Cap
$39.50 billion
Rev. per Employee
$599,912
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/zigman2/quotes/204467551/composite
US : U.S.: NYSE Arca
$ 81.73
+0.57 +0.70%
Volume: 5.20M
July 23, 2021 4:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,411.79
+44.31 +1.01%
Volume: 1.78B
July 23, 2021 5:16p
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