1 Chemical Company Worth Watching

Robust sales growth across all business segments and higher prices uplifted diversified chemical giant DuPont's (NYSE: DD  ) adjusted bottom line by 17%, beating Street estimates. The Delaware-based company has also declared a quarterly dividend of $0.41 per share.

Are the numbers good enough for the company to grab a place in our watchlist? Let us figure it out.

The numbers
The chemical maker's consolidated revenue for the quarter jumped 19% from the year-ago period to $10.3 billion. While the primary driving factor was higher prices, volumes also increased across all business segments and regions. The agriculture unit contributed $3 billion to total sales, up 10% from last year, and the performance chemicals segment added around $2 billion, up a big 27% from last year.

Price increases helped offset raw materials and other costs, which rose by 13% from last year. As a result, the company's operating income surged 39% to $1.8 billion.

Strong top-line growth boosted DuPont's net income to $1.22 billion from $1.16 billion in the year-ago quarter. Excluding significant items such as costs related to the acquisition of Danisco, earnings per share grew to $1.37 from $1.17 in the same quarter last year.

Optimistic signs
The Danisco integration seems to have come around really fast, given that the acquisition was completed in May. It contributed 3% to sales in the second quarter.

An earlier acquisition of a sulfuric acid firm is proving beneficial, too, contributing 8% to the protection segment's sales by widening DuPont's reach in emerging markets. DuPont's latest acquisition has been Innovalight, with an aim to expand in the solar energy market.

Presence in developing markets is boosting DuPont's revenues significantly. These markets contributed 30% to total sales this time, growing a strong 29% year on year. Other players such as Dow Chemical (NYSE: DOW  ) also reported a record 23% growth in Asia-Pacific sales in its second quarter.

Pricey paint
The most favorable trend working for the chemicals industry right now is the tight market for titanium dioxide. TiO2 producers are thus continuously passing on costs to their customers, mostly the paint companies. Last month, DuPont announced a fresh price hike. Other companies such as Huntsman (NYSE: HUN  ) and Kronos Worldwide (NYSE: KRO  ) both last announced such hikes in June. Clearly, these companies are making a lot of green out of the white pigment.

DuPont is also expanding its capacity for chemical production. Given the current trend, this should work in favor of the world's largest TiO2 producer.

The Foolish bottom line
DuPont's management has raised its full-year earnings guidance from a range of $3.65-$3.85 per share to $3.90-$4.05 per share. With expansionary moves and solid performances in major segments, the stock is worth watching.

To stay up to speed on the top news and analysis on DuPont, or any other stock, click here to add it to your stock watchlist.

Neha Chamaria does not own shares of any of the companies mentioned in this article.

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Read/Post Comments (10) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 15, 2011, at 7:00 PM, funfundvierzig wrote:

    Despite all the splatter from public relations hype, overall DuPont sales volume in Q2 2011 was up only 2%. That's not robust in a recovering global economy; it's anemic.

    What's worth watching for investors' protection is the huge blowup of a new product rollout this spring. DuPont's much touted biggest "scientific advance in herbicide technology in 40 years, " week-killer Imprelis, has decimated hundreds of thousands of landscape trees nationwide immediately after application of this highly toxic and misbranded "new" DuPont product. Only last week the EPA slammed DuPont with a STOP SALE order, and demanded a recall of Imprelis. Estimates of total damages range upwards to $1 billion or more! That's a very material event, and the bottom-line at DuPont is bound to suffer.

    Merely the perspective of one individual retail investor and DD shareholder...funfun..

  • Report this Comment On August 15, 2011, at 7:20 PM, funfundvierzig wrote:

    Investors should also keep in mind, according to the official DuPont PRESS RELEASE, July 28, 2011, announcing Q2 2011 results, reported per share earnings increased by a meagre 3 cents per share from $1.26 to $1.29 year over year. This unimpressive per share performance resulted in part from an increase in the number of shares outstanding from burgeoning executive compensation and other dilutive forces.

    ...funfun..

  • Report this Comment On August 15, 2011, at 7:53 PM, 1rityls wrote:

    Uhhh click on funfunvierzig's profile and you'll see that all his/her posts are about slamming DuPont and praising it's competitors like Monsanto and Dow.... clearly he/she has a vested interest here...

  • Report this Comment On August 15, 2011, at 9:46 PM, funfundvierzig wrote:

    1ritysis,

    Why the off-topic personal nonsense from you? The marginalising inuendo, off-subject?

    We note this is your first and only post. Are you shilling for DuPont Management, on a PR damage control mission, given the enormity of the Imprelis fiasco?

    ...funfun..

  • Report this Comment On August 15, 2011, at 9:56 PM, Frankydontfailme wrote:

    funfun, the numbers you mock are quite impressive considering we're not in a recovery at all. We're in a recession.

    That being said Dupont will have issues going forward as the world's economy continues to slow down... as will its competitors.

    I would not recommend a significant investment in any of these companies until the prices come down at least 15%.

  • Report this Comment On August 15, 2011, at 11:39 PM, 1rityls wrote:

    funfunvierzig,

    I have been visiting this website for a couple months and simply never really came across something that I wanted to comment on until I saw your post.

    I don't think my comments were off-topic, obviously one should always consider the biases of anyone who claims to be giving advice. In your case it's so blatantly anti-DD that it's a joke. How can anyone take you seriously when your only posts, all since MAY, just bash on DD? Do you think that people can't recognize a clear agenda when they see one? Do you have any opinions about non-agribusiness/chemical stocks?

    I do not work for DuPont, do you work for Monsanto or Dow? Sheesh.

  • Report this Comment On August 16, 2011, at 7:59 AM, funfundvierzig wrote:

    1rityis,

    Why the continuing off-topic personal attack? This forum is not about any particular poster, it's about the subject at hand.

    The undersigned has no connection or employment with Monsanto or Dow or any other corporation, environmental group, NGO, law firm, PR firm, undsoweiter. We are who we say we are, merely an individual retail investor.

    DuPont's secretive and evasive Management has been largely successful over the years in covering up and hiding this conglomerate's intractable troubles and weaknesses. We offer an opposing viewpoint, and in retaliation for speaking freely and independently, hostile hecklers, such as yourself, and many of whom are DuPont employees and Managers erstwhile and active, have initiated off-topic personal assaults at various internet news and investor sites. It's an old PR trick for PR damage control.

    What is your overriding curiosity about a single poster on this board?? Why the monitoring and the personal probe?

    We note you offer absolutely nothing in the way of civil debate or supplementary facts to refute what we have to say in our opinions; you put forth only a sleazy ad hominem distraction. You sound like a classic shill and PR damage controller; your only two posts under your recently created screen name are insulting smears on the undersigned! "Sheesh" as you so sneer. ...funfun..

  • Report this Comment On August 16, 2011, at 8:26 AM, funfundvierzig wrote:

    Folks, given the hostile heckling on this board against independently-minded commentators (violating Fool's Rules), it would appear that some avid fans and shareholders of DuPont are getting extremely nervous about this exploding new product crisis. What is the Imprelis fiasco going to cost DuPont?

    Total losses and damages to victims, homeowners and lawn care professionals, range northward to $1 billion or more. The U. S. EPA has already received 7,000 reports of tree destruction and damage over a wide swath of the United States. More than a score of lawsuits have been filed, many requesting class action status for a very large and growing class of injured property owners.

    To date, DuPont Management and their PR flacks have been largely successful in downplaying and covering up this extraordinarily material event. When will DuPont officials be forthcoming with an Imprelis disclosure to shareholders and an SEC filing?

    Merely the query of one individual retail investor and DD shareholder...funfun..

  • Report this Comment On August 16, 2011, at 9:51 AM, funfundvierzig wrote:

    "forum troll"??

    1rityis, you've made it clear, given your entire inventory of three ad-hominem attack posts to date under your screen name, you're here to initiate personal attacks and to heckle and harass in retaliation against anyone daring to question the performance of DuPont and its failing new product introduction this spring, Imprelis.

    Folks, it's called corporate PR damage control, and it's sleazy.

    ...funfun..

  • Report this Comment On August 16, 2011, at 4:03 PM, 1rityls wrote:

    LOL okay.

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