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DuPont takes action against market



Published January 12, 2009
DuPont recently 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 Chad Holliday. “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.”
DuPont’s full-year 2008 free cash flow is expected to be approximately $1.3 billion, as planned, with working capital improvements offsetting earnings decline. Free cash flow will increase to approximately $2.5 billion in 2009, reflecting a planned $1 billion net working capital reduction and a 10-20% 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 approximately $130 million in cost reductions from its restructuring plan. This compares to an original 2009 cost productivity plan of $200 million.
The company has also commenced a restructuring plan with an associated pre-tax charge of approximately $500 million in the fourth quarter resulting in a pre-tax earnings increase of approximately $130 million for 2009, and approximately a $250 million annual run rate.
The company expects a loss of $0.20 to $0.30 per share for the fourth quarter 2008, excluding an estimated $0.40 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 $0.60 to $0.70 per share. Full-year 2009 earnings are expected to be approximately $2.25 to $2.75 per share


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