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DuPont posted an 11 percent jump in third-quarter profit Tuesday, beating Wall Street estimates, but the chemical maker narrowed its earnings outlook for the year
The company, which feeds the automotive, electronic, agricultural and personal protection sectors, will likely be seen this quarter as a leading indicator of the chemical industry's health.
While the strong earnings appears at first blush to be a sign the economy is improving, much of the gain came from some $300 million in cost cuts and falling sales.
Wall Street typically prefers to see profits generated by sales rather than cost cuts, but that should not be a black eye for capital-intensive companies like DuPont, Sterne Agee analyst Mark Connelly told Reuters.
"The operating performance here is pretty credible," he said. "When a basic material company demonstrates substantial cost reductions, it deserves some credit."
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Additionally, DuPont [DD
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] said it is seeing demand for products slowly improve.
"With a more streamlined organization, permanent fixed cost reductions, and increased productivity, DuPont is well-positioned to capitalize as markets improve," Chief Executive Ellen Kullman said in a statement.
Net income rose to $409 million, or 45 cents per share, from $367 million, or 40 cents per share, a year earlier. Analysts on average expected 33 cents per share, according to Thomson Reuters.
Revenue fell 18 percent to $5.96 billion from $7.29 billion. Analysts expected $6.14 billion.
Revenue fell across all five of the company's segments, including its safety & protection unit, which makes the Kevlar vest.
Across the globe, revenue also fell, though demand in the Asia/Pacific region rose from earlier this year, the company said.
For the full year, the company now expects earnings of $1.95 to $2.05 per share, compared with a previous estimate of $1.70 to $2.10.
The Wilmington, Delaware-based company's shares closed Monday at $34.62. The stock has traded between $16.05 and $36.17 in the past 52 weeks.
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