DuPont Co. cut its full-year profit forecast more than analysts expected amid lower crop prices that is causing farmers to spend less on its pesticides and seeds.
Profit in 2015 will be $3.10 a share, DuPont said Tuesday in a statement. That compares with the $3.56 average estimate of 12 analysts in a Bloomberg survey. DuPont said it also lowered its forecast from $4 previously to account for the July 1 spin off the performance chemicals unit and a stronger dollar.
Net income dropped to $1.03 a share from $1.15 a year earlier, Wilmington, Delaware-based DuPont said. Profit excluding some items was $1.18 a share, trailing the $1.21 average of 15 analysts. Sales fell to $8.6 billion from $9.71 billion, missing the $8.98 billion average estimate.
The spinoff of the chemicals unit, renamed Chemours Co., allows Chairman and Chief Executive Officer Ellen Kullman to increase focus on more profitable businesses such as seeds and pesticides. Earnings in the agriculture unit fell 6.9 percent as low corn and soybean prices eroded farmer finances.
“This reliance on ag looks to us to be a negative over the near term and potentially the longer term as well, as we see an extended bear market in ag as possible,” Chris Shaw, a New York-based analyst at Monness, Crespi, Hardt & Co. who rates the shares neutral, said in a July 23 note.
The earnings report is the first since Kullman defeated activist investor Trian Fund Management’s four board nominees, including CEO Nelson Peltz, in a May proxy contest. Trian, DuPont’s fifth-biggest shareholder, hasn’t ruled out another fight for board seats.
Kullman, meanwhile, plans to cut $1 billion of expenses this year and she intends to use a $4 billion dividend from Chemours to buy back shares over 18 months.