During DuPont’s 2011 Investor Day, held on Dec. 13, Ellen Kullman, Chair and CEO, along with 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 in its agriculture business, as well as other significant achievements in nutrition, industrial biosciences, electronic materials and advanced protection materials.
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 is differentially managing its portfolio to deliver solutions that meet the food, energy and protection challenges of a growing global population," Kullman explained. "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."
Approximately 75 percent of DuPont's capital and R&D expenditures are allocated to growth segments, Kullman added. As a consequence of this approach, its portfolio is shifting toward sustainable high-growth opportunities where innovation differentiates the company and creates value for its customers.
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 leaders outlined specific long-term growth targets and priorities for each of the company’s reporting segments, including:
- 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.
According to Kullman, Dupont will give its auto-paints unit the opportunity to meet financial targets before considering its options for the business, a Bloomberg BusinessWeek article noted. “From a performance standpoint, we’ll give them a chance to see if they can get there,” she said. “If any of our businesses can’t obtain their targets, obviously we’ll look at alternatives, whatever that means.”
