Plunging corn prices and adverse weather helped prompt DuPont Co., the maker of Pioneer genetically modified corn, to trim its full-year earnings forecast as some farmers switched to soybeans.
Second-quarter operating profit will be "moderately" less than a year earlier, the Wilmington, Delaware-based company said yesterday in a statement. Operating earnings in 2014 are predicted to be $4.00 to $4.10 a share, less than its previous projection of $4.20 to $4.45 and trailing the average of analysts’ estimates compiled by Bloomberg.
DuPont slid 2.5 percent to $65.99 at 9:34 a.m. in New York.
Some farmers have switched to soybeans this year after the price of corn slumped from a record in 2013, leading DuPont to take more writedowns on seed inventories than it expected. Monsanto Co., the world’s largest seed producer, also said this week that its corn profit was lower in its most recent fiscal quarter.
DuPont said better-than-expected North American soybean sales volumes won’t offset the drop in corn. Its agriculture unit, the company’s biggest division by revenue, will see earnings decline "in the low teens" in percentage terms, Executive Vice President Jim Borel said in a conference call.
While the company said most of its other segments remain on target, its performance chemicals business will be affected in the current quarter by lower prices for refrigerants.
DuPont, led by Chairman and Chief Executive Officer Ellen Kullman, said in October that it plans to spin off the performance chemicals unit, the world’s largest producer of titanium dioxide, citing the segment’s volatile earnings.
The move came two months after activist investor Nelson Peltz’s Trian Fund Management LP took a stake in DuPont. The company also announced in January a $5 billion stock buyback plan.
DuPont said it will record a 20-cent-a-share restructuring charge after tax for the second quarter. The charge is due to a plan to cut costs following the spinoff, which is expected in mid-2015. The plan should achieve at least $1 billion in savings by the end of 2019, the company said.