DuPont de Nemours Inc. said falling nylon prices will weigh on its profit this year, a consequence of weak industrial output that is hurting sales for some U.S. manufacturers.
The Wilmington, Del.-based company said Thursday that higher supply of nylon and declining demand had hurt prices and its expectations for 2020. Shares were down more than 7% in recent trading.
DuPont is the latest manufacturer hurt by poor demand from industrial customers. 3M Co. said this week that its results were hurt by weak production in electronics and cars. Paint maker PPG Industries Inc. also said sales would be hurt this year by lower production rates at some of its customers. Shipper United Parcel Service Inc. said it expects U.S. industrial production to decline this year.
Nylon prices climbed in 2018 after an industrywide supply shortage which DuPont said has since subsided. That has brought prices down as demand also has dropped due in part to an extended decline in car production. Auto makers are important users of some types of nylon. DuPont said lower nylon demand could dent its revenue by up to $250 million.
“The nylon pricing dynamics are so significant,” Dupont Chief Executive Marc Doyle told investors on a call. “They’re kind of overwhelming a lot of the positives.”
DuPont said its fourth-quarter sales declined 4% in the U.S. and Canada on an organic basis, which excludes currency fluctuations and mergers. Organic sales declined 9% in the company’s transportation and industrial unit, which includes its nylon business.
Sales in the company’s fourth quarter as a whole fell 4.6% to $5.2 billion.
The manufacturer posted a quarterly profit of $176 million, compared with $482 million in the same quarter a year before. On an adjusted basis, profit per share was 95 cents, down from $1.43 in the year-ago period.
For this year, DuPont said it expects earnings per share to be flat as the decline in nylon prices offsets gains in other businesses. DuPont expects an adjusted profit of $3.80 a share in 2020, even with what it reported for 2019.
DuPont, in December, reached a deal to spin off its nutrition business and combine it with International Flavors & Fragrances Inc., aiming to make a top supplier of ingredients to food makers.
Source: Market Watch
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