Danisco buy-out fails to dent DuPont Q2 earnings

27-Jul-2011 - Last updated on 01-Aug-2011 at 16:19 GMT

Dupont, which earlier in the year warned that its May $6.49bn acquisition of Danisco would dent its yearly profits, has defied expectations in second quarter results published today.

DuPont recorded net income of $1.22bn, compared to $1.17bn the same quarter in 2010, and said economic recovery had permitted a return to pricing strength that allowed it to offset the Danisco purchase to a degree, as well as raw material price hikes.

Those price rises added up to $756m compared to $540m in increased raw material costs.

Revenue jumped 19% to $10.26 billion compared to analyst predictions of $9.68 billion, with Danisco contributing about 3% of those sales for the quarter.

“The increase principally reflects higher selling prices, increased sales volume and currency benefit, partly offset by higher raw material, energy and freight costs,” the company said.

Genetically modified (GM) seeds and fertilisers, Kevlar used for bullet-proof materials and titanium dioxide paints predominantly sold to car makers were the strongest performers. The seeds and fertilisers business is the company’s biggest earner with sales of about $2.99bn for the quarter and earnings of $826m.

In the company webcast chief executive officer Ellen Kullman said: "DuPont is executing well. We continue to stay close to our customers and market."

Nutrition and health

Sales in the nutrition and health cluster came in at just under $500m, compared to $300m in Q2, 2010, with the bulk of that gain coming from the Danisco one-month input.

Pre-tax operating profits for the cluster jumped from $18m to just below $40m.

DuPont forecast sales of $1.6-$1.7bn for the second half of the year for the nutrition and health division, driven by Danisco sales and increased prices.