Shares of chemical maker EI DuPont de Nemours & Co. (NYSE: DD) are trading higher this morning after the company lifted both its 2007 and 2008 earnings outlook, citing strength in its agriculture and nutrition business and higher raw material prices.The company said it expects to show a rise of 11% or more for its 2007 profit, based on better-than-predicted fourth-quarter numbers. According to Charles O. Holliday Jr. , the company's Chief Executive Officer, DuPont's quarterly sales came in above analysts' expectations, lifted by "science-driven innovations and market differentiation."
The third-biggest U.S. chemical maker now anticipates 2007 earnings per share of $3.20, excluding special items. That's at the upper end of its earlier forecast for earnings per share in a range of $3.15 and $3.20. DuPont's predictions for 2007 exclude $0.09 per share of charges and a net benefit of $.02 per share. Analysts, on average, forecast a profit of $3.19 per share.
For 2008, the chemical maker raised its profit outlook to a range of $3.35 to $3.55 a share compared to its previous forecast of $3.31 to $3.52. Analysts had expected the company show earnings of $3.42 per share in 2008.
Holliday declared in a telephone interview with CNBC television that the company is not "seeing a slowdown in demand" for its products and expects that growth from all segments in emerging markets should offset a slower U.S. economy. Mark Gulley, analyst at Soleil Securities, was surprised by the company's higher outlook. The broker believes that DuPont 's 2008 forecast seems appropriate "in this market, which is very worried about a U.S. recession."
DuPont did warn that it would take a fourth-quarter charge of about $135 million to adjust the value of its polyester films joint venture which was affected by higher crude oil prices and "adverse changes in market conditions."
The company had to face a pretty difficult 2007 when saw its shares plunging 11% to hit a year low of $42.72 in December. But the chemical maker's optimism over its further earnings sent its shares up almost 9% in this morning's trading. It still remains under question how long the company will keep moving upwards.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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