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Thank Nelson Peltz for DuPont profit beat

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Thank Nelson Peltz for DuPont profit beat

Investors have activist investor Nelson Peltz to thank for DuPont’s earnings beat, analyst Mark Connelly said Tuesday. The chemical company is in the middle of a proxy war with investors represented by Peltz’s investment management firm Trian Partners, which owned 24.6 million DuPont shares in February.DuPont-Research-Center

“At the end of the day DuPont is doing everything they possibly can, and it’s because Nelson Peltz is here. I doubt these numbers would be as good if he weren’t,” said Connelly, managing director at equity broker CLSA. He spoke in an interview on CNBC’s “Squawk Box.”

DuPont on Tuesday delivered quarterly earnings that topped analysts’ expectations, but revenue, hurt by a stronger dollar, was lighter than forecast. The chemical company posted fiscal first quarter adjusted earnings of $1.34 per share, down from $1.58 a share in the year-earlier period. Revenue fell to $9.2 billion from $10.13 billion a year ago.

Wall Street had expected the company to deliver quarterly earnings per share of $1.31 on $9.42 billion in revenue, according to a consensus estimate from Thomson Reuters. The stock was down in premarket trading.  DuPont also boosted its quarterly dividend to 49 cents a share from 47 cents a share. The company estimated that the negative currency impact for the year has increased to about 80 cents a share, up from 60 cents per share previously forecast. DuPont now expects to be at the low end of the previous guidance range of $4 to $4.20 operating earnings per share for the year.

DuPont faces an “awfully tough environment” with a “huge amount of foreign exchange headwinds,” but there are positive indicators in the earnings report, Connelly said. DuPont is finally cutting out costs, something the company should have done in 2010, he added. The company is suffering in the short term from the spinoff of its volatile titanium dioxide business, which was one of its best units for absorbing fixed costs, according to Connelly. However, he said it was the right decision, and once again credited Peltz for pushing DuPont to move its performance chemicals units into a separate firm, the Chemours Company.


February 2018
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