(Reuters) - DuPont DD.N Chief Executive Officer Ellen Kullman is stepping down this month and will be replaced temporarily by board member and veteran U.S. executive Edward Breen, who oversaw the break-up of conglomerate Tyco International Plc TYC.N.
The chemical and crop company, which is struggling with the strong U.S. dollar and weakening agricultural markets in Brazil and other emerging markets, slashed its earnings forecast for the second time this year.
Shares of DuPont, officially known as E.I. du Pont de Nemours & Co, rose 5.6 percent to $54.17 in extended trading.
Kullman, 59, joined the company more than 27 years ago and has been its CEO since 2009. Earlier this year, she fended off an attempt by activist investor Nelson Peltz’s Trian Fund Management to land board seats. Trian declined comment on Kullman’s exit.
Before Monday’s announcement, Du Pont shares were down nearly 28 percent from May 12, the day before Peltz lost his proxy battle with DuPont. Kullman acknowledged as recently as last week that the slide in its share price was “a concern.”
A major DuPont shareholder said on Monday that Kullman’s decision to leave makes it far less likely that Peltz would launch a second proxy contest.
There was wide expectation that Peltz’s Trian, which has kept a 2.5 percent stake in DuPont, would have another go at DuPont come next proxy season.
“Clearly the board has continued to press Peltz’s concerns about underperformance and some steps were taken,” said the investor, who asked not to be named.
Because of the tough currency and demand environment, DuPont lowered its 2015 forecast for operating earnings per share to about $2.75 from $3.10. It already cut its forecast in July.
“Kullman appears to be accepting the blame for not having good visibility on the company’s earnings,” said SunTrust Robinson Humphrey analyst James Sheehan, adding that the appointment of Breen should please activist investors.
“Breen is an individual both sides respect, and he will be accepted by Trian Partners as an interim CEO,” he said. “His selection probably does not indicate a dramatic shift in corporate strategy.”
A source close to DuPont told Reuters that Breen has said that DuPont’s four main divisions have synergies and that he did not want the CEO job permanently.
DuPont is also speeding up cost cuts to counter weakening sales, saying it has redesigned some operations and is now targeting about $1.6 billion in annual savings by the end of 2017.
Excluding the impact of currency, operating earnings per share for the year, including expected benefits from share repurchases and cost savings, are expected to rise 3 percent from a year earlier.
Kullman is set to leave Oct. 16, when Breen will take over as interim CEO.
Breen was Tyco CEO from 2002 to 2012, cleaning up the mess left behind by previous CEO Dennis Kozlowski, who left in 2002 and was subsequently convicted and imprisoned for receiving unauthorized bonuses and other financial crimes.
Breen has been a board member of DuPont since February.
Reporting by Sneha Banerjee in Bengaluru, Christian Plumb and Greg Roumeliotis in New York and Svea Herbst-Bayliss in Boston; writing by Bill Rigby; Editing by Bernard Orr and Lisa Shumaker