During DuPont's 2011 Investor Day, Chair and CEO Ellen Kullman and the company's senior leaders detailed the dynamic global growth strategy for continuing to deliver strong, sustainable results in 2012 and beyond, contributing to 7 and 12 percent compound annual growth rates for sales and earnings, respectively, in the coming years.
"Science-powered, market-driven innovation remains the cornerstone of the company," Kullman said. "DuPont expects nearly $12 billion of revenue from products introduced in the previous four years, roughly 30 percent of company sales in 2011. That demonstrates the power of our innovation." Kullman and senior leaders highlighted many DuPont success stories, including the blockbusters Optimum AcreMax family of seed products and Rynaxypyr insect control, and other significant achievements in nutrition, industrial biosciences, electronic materials and advanced protection materials.
"DuPont is differentially managing its portfolio to deliver solutions that meet the food, energy and protection challenges of a growing global population. By conducting a critical analysis of each business, its market position, capabilities and ability to differentiate versus competition, we can drive the most compelling opportunities for long-term growth," Kullman said. "Approximately 75 percent of our capital and R&D expenditures are allocated to growth segments. As a consequence of this approach, our portfolio is shifting toward sustainable high-growth opportunities where innovation differentiates our company and creates value for our customers."
Kullman said DuPont expects to deliver $300 million of both fixed cost and working capital productivity in 2012. In addition, she said DuPont will deliver $130 million in cost synergies from the Danisco acquisition in 2012, one year ahead of the original plan.
DuPont expects full-year 2011 sales to be up about 20 percent, with double digit increases in most segments. Sales in developing markets are expected to jump 30 percent this year, comprising about one-third of total company sales. Earnings are expected to be up between 18-20 percent. These results reflect a comprehensive approach to target and grow in these markets, including opening new innovation centers in South Korea, Taiwan, Thailand and India in 2011. DuPont announced guidance for 2012 earnings per share in the range of $4.20-$4.40, representing 7-12 percent growth versus the 2011 guidance midpoint. This range includes about $.17 of additional pension expense.
Excluding these additional pension costs, guidance for next year would represent 12-17 percent growth. The company expects sales in the range of $40-$42 billion. "Our long-term growth profile reflects the strength of our portfolio, innovations and ongoing benefits from disciplined productivity efforts," Kullman said.
DuPont leaders outlined specific long-term growth targets and priorities for each of the company's reporting segments:
- Agriculture - Long-term compound annual sales growth is expected to be 8-10 percent with pre-tax operating income (PTOI) margins increasing to 20-22 percent, with strong global growth based on a stream of innovation. In seed, the outlook reflects international growth coupled with North America penetration of the Optimum AcreMax family of integrated and reduced refuge products. The business' route-to-market continues as a cornerstone of success and a differentiator in the marketplace. In crop protection, multiple new product introductions drive growth in volume and price.
- Nutrition & Health - Long-term compound annual sales growth is expected to be 7-9 percent with PTOI margins expanding to a range of 12-14 percent, reflecting the uplift from the full business integration, sales and cost synergies, and capturing growth in the areas of nutrition solutions, improved health and food protection.
- Electronics & Communications - Long-term compound annual sales growth is expected to be 10-12 percent with PTOI margins between 17-19 percent. With photovoltaic installations growing about 10 percent in 2012 coupled with a constant stream of innovation, the company expects growth in photovoltaics, consumer electronics, and advanced OLED technology, thus driving margin expansion.
- Industrial Biosciences - Long-term compound annual sales growth is expected to be 10-12 percent, with PTOI margins between 15-17 percent, driven by continued innovations and the commercialization of DuPont's biofuels business. New products, productivity and cost synergies will contribute to achieving margin goals.
- Safety & Protection - Growth across the protection space is expected through application development in the industrial and automotive markets, enabled by the company's recently launched, light denier capability at the DuPont Kevlar Cooper River facility. Long-term targets represent 8-10 percent compound annual sales growth and 21-23 percent PTOI margins.
- Performance Chemicals - Demand growth in 2012 and beyond will be powered by the developing Asia Pacific economies and favorable industrial fundamentals. Increasing demand for TiO2 and fluoropolymers is complemented by ongoing capacity expansion through brown-field and productivity projects. Long-term sales are expected to grow 6-8 percent compounded annually, with PTOI margin targets of 18-20 percent. Near-term PTOI margins are expected to be 22-24 percent.
- Performance Coatings - 2012 PTOI margins are expected to improve driven by productivity and a 6 percent increase in auto builds. Long-term targets represent 3-5 percent compound annual sales growth and 10-12 percent PTOI margins.
- Performance Materials - This segment overcame a number of challenges this year, including the Japan earthquake and, more recently, destocking in the automotive channel. Long-term compound annual sales growth is expected to be 4-6 percent, driven by secular trends in automotive light weighting and high-performance plastics used in electronics and packaging. The long-term PTOI margin target is 14-16 percent.
"Our company performance, vision and growth outlook is compelling. We are in a race to deliver science-powered innovations to a world changing at an astounding pace. We are confident not only in our ability to make the right investments to achieve our goals, but also to have the management discipline and experience to adjust appropriately as interim economic conditions require," said Kullman.
The presentations used by DuPont's leadership team during the meeting and the webcast recording are available at www.dupont.com in the Investor Center.
