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July 28 (Reuters) - Chemical and crop company DuPont said the remainder of the year would be “challenging”, as a strong dollar and persistently weak demand for its farm products continue to chip away at sales.
DuPont also cut its full-year profit forecast due to the weak outlook and to account for the spin-off of its performance chemicals unit, sending its shares down as much as 7 percent to a two-year low.
The company lowered its full-year operating earnings forecast to $3.10 per share from $4 per share - 80 cents due to the spin-off and 10 cents due to weak agricultural sales.
DuPont, whose sales have missed analysts’ expectations for the last four quarters, has also been hit by a strengthening dollar. The company gets about 60 percent of its overall sales from outside the United States.
The company is speeding up its cost-reduction program to combat the impact of weakening sales, and in January raised its cost-reduction target by $300 million to at least $1.3 billion by 2017.
“We fully expect to continue to find additional opportunities that will take us beyond the $1.3 billion of cost reduction,” Chief Executive Ellen Kullman said on a post-earnings call on Tuesday.
Weak global demand for crop protection products, reduced corn farming in Latin America and lower soybean volumes in North America are weighing on DuPont’s farm business, which accounts for a little over a third of total sales.
DuPont clocked lower sales in all its six ongoing businesses in the second quarter ended June 30 and forecast lower sales in the current quarter as well.
The company expects sales in the agriculture business to fall the most in the current quarter - in the “mid-teens” in percentage terms, steeper than the 11 percent fall in the latest quarter.
Consolidated net sales fell 11.5 percent to $8.60 billion, missing analysts’ average estimate of $8.75 billion, according to Thomson Reuters I/B/E/S.
Net income attributable to DuPont fell 12 percent to $940 million. On an operating basis, it earned $1.18 per share, in line with analysts’ expectations.
Shares of the company, which in May thwarted an attempt by activist investor Nelson Peltz’s Trian Fund Management to land board seats, were down 1.5 percent at $55.90 in late afternoon trading. They hit a two-year low of $52.79 earlier. (Reporting by Amrutha Gayathri in Bengaluru; Editing by Anil D’Silva and Savio D’Souza)