Financial News

DuPont takes action against market challenges

DuPont recently announced further actions to address current market challenges and strengthen the company’s competitiveness in 2009, including continued focus on maximizing cash flow, and provided earnings guidance for the fourth quarter 2008 and the full year 2009.

A steep global decline in construction and motor vehicle sales and consumer spending has resulted in declining industrial production, intensified by inventory reductions across most supply chains. These conditions have precipitated a sharp downturn in demand during the fourth quarter.

“We have taken immediate and aggressive actions to maximize cash flow by reducing cost, working capital and capital expenditures in response to current market challenges,” said DuPont chairman and CEO Chad Holliday. “We will build on our strong financial and market positions and continue prudent financial discipline in navigating through this challenging economic environment. We are providing 2009 earnings guidance and underlying assumptions in our effort to be as transparent as possible with respect to the current and expected impact of the global recession. We are, however, realistic about the potential for further change and we will adjust actions as conditions warrant.”

DuPont’s full-year 2008 free cash flow is expected to be approximately $1.3 billion, as planned, with working capital improvements offsetting earnings decline. Free cash flow will increase to approximately $2.5 billion in 2009, reflecting a planned $1 billion net working capital reduction and a 10-20% reduction in capital spending.

DuPont is taking actions to deliver in 2009 $600 million in fixed cost productivity improvements, excluding volume and currency, in addition to approximately $130 million in cost reductions

from its restructuring plan. This compares to an original 2009 cost productivity plan of $200 million.

The company has also commenced a restructuring plan with an associated pre-tax charge of approximately $500 million in the fourth quarter resulting in a pre-tax earnings increase of approximately $130 million for 2009, and approximately a $250 million annual run rate.

The company expects a loss of $0.20 to $0.30 per share for the fourth quarter 2008, excluding an estimated $0.40 per share significant item charge for the company’s restructuring plan. On a reported basis, the company expects fourth quarter earnings to be a loss of $0.60 to $0.70 per share. Full-year 2009 earnings are expected to be approximately $2.25 to $2.75 per share.

RPM’S CEO EXPECTS RESULTS
WILL BE BELOW PRIOR YEAR

In a presentation at the 19th Annual Citi Chemicals Conference, RPM International’s chairman and CEO, Frank Sullivan, discontinued the company’s current guidance for its fiscal year ending May 31, 2009, and indicated that results would likely be below the prior year.

“Given the continued deterioration of economic conditions, it is highly likely that RPM results for our 2009 fiscal year will be below the prior year,” he said. “Additionally, given the volatility we are seeing in some of our core markets, it is nearly impossible to provide any definitive guidance for our fiscal 2009 results.

“With $318 million of committed unused long-term credit and approximately $190 million in cash, RPM’s liquidity is in excess of $500 million. Furthermore, between now and 2011, we have only $164 million of debt obligations coming due, with the remainder of our debt maturing roughly even-

ly in two-year increments between 2011 and 2018,” Sullivan continued. “With a debt/capitalization ratio at the lower level of our historic range, solid levels of liquidity and continuing strong cash generation from our operations, we are confident of our ability to maintain our current dividend and take advantage of growth opportunities, including acquisitions.”

FREEWORLD COATINGS
RELEASES YEAR END RESULTS

According to Freeworld Coatings’ annual report with year ending September 2008, the company’s revenue was up 15% to approximately $266 million, while operating profit was up ten percent to approximately $40 million.

“We expect the year ahead will even be more challenging, but we remain optimistic that we will perform competitively,” said Freeworld CEO, Andre Lamprecht. “A key focus will be on fixed domestic investment where infrastructure will remain a significant driver in South Africa beyond 2010."

The decorative coatings segment increased sales by 15% to approximately $200 million and EBITDA by over 11% to approximately $32 million in the year despite challenging economic conditions, in particular in South Africa’s home market where rising inflation and interest rates weighed on the individual consumer segment. However, a strong performance in the trade and industrial sector helped offset this pressure in the individual consumer segment, which represents only approximately 32% of sales volumes.

The performance coatings segment produced solid results lifting both turnover and profit. Turnover rose eight percent to approximately $95 million with EBITDA increasing by three percent to approximately $15 million assisted by stringent cost control.