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DuPont will miss forecasts
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September 7, 2000: 10:11 a.m. ET
Will miss 2000, 2001 targets due to currency, energy and raw material costs
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NEW YORK (CNNfn) - DuPont Co. said Thursday that higher-than-expected energy and raw material costs would cause it to miss Wall Street earnings forecasts this year and next.
The Wilmington, Del.-based chemical maker also said it is being hurt by a strong dollar, which reduces revenue from overseas sales, and is starting to see anecdotal evidence of a drop in sales volume in some products.
The company's warning said it now expects earnings excluding one-time items of $2.85 to $2.95 a share in 2000, compared with forecasts of $3.01 a share, according to First Call, which tracks Wall Street predictions.
DuPont's statement did not specify how much of the shortfall would be in the third quarter and how much in the fourth, although company officials told analysts that 45 percent of the second-half earnings would come in the current period. That would put most of the problems in the third quarter, with earnings coming in the 50 to 54 cent range, compared with First Call's forecast of 58 cents in the period, and fourth quarter profits coming in at 61 to 66 cents a share, compared with a forecast of 66 cents from First Call.
 The company said it is looking for some improvement in energy and raw material costs, as well as some strengthening of the euro versus the dollar going into next year. But even with those factors working in its favor, it now sees earnings per share growth of 10 percent next year, which would bring it to $3.14 to $3.24 a share for 2001, compared with average forecasts of $3.49 a share.
"The 10 percent growth is set as a floor," said Gary Pfieffer, the company's chief financial officer. "Given what happens with macro economic factors, if they actually move more favorably than forecasts, we could do better than that. But given that I keep seeing forecasts that the euro will start strengthening in the next 60 days, I'll believe it when I see it."
Pfieffer said higher raw material costs and currency exchange rates are expected to exceed $1 billion pretax this year. He argued that the fact that earnings per share would rise this year despite those costs is a sign that the company is becoming more efficient and that price increases are holding.
The company earned $2.58 a share from continuing operations in 1999.
Company officials said they are seeing some early signs of reduced sales volume. They pointed to factors such as a weaker apparel market that reduced the demand for synthetic fabrics, the shutdown of some Ford Motor Co. (F: Research, Estimates) plants for two weeks due to a recall of Firestone tires, and other indications of a general slowdown in the economy.
They said the reduced volume could be responsible for a 5-cent-a-share decrease in the second-half earnings, but that impact is included in Thursday's guidance.
Shares of DuPont (DD: Research, Estimates), a component of the Dow Jones industrial average, sank $4, or 8.5 percent, to $43 in early trading Thursday, taking the Dow lower in the opening minutes of the session. 
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DuPont
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