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DuPont considering sale of Performance Chemicals unit

By: Frank Esposito

July 23, 2013

DuPont Co. is considering the sale of some or all of its Performance Chemicals unit, which includes the firm's Teflon-brand fluoropolymer and Ti-Pure brand titanium dioxide businesses.

"DuPont's consideration of strategic alternatives … may include a full or partial separation of each of these businesses from the company through a spin-off, sale or other transaction," officials with Wilmington, Del.-based DuPont said in a July 22 news release.

"We have been carefully weighing the strong cash generation of our Performance Chemicals businesses against their cyclicality and lower growth profile," Chairman and CEO Ellen Kullman said in the release.

The Performance Chemicals unit has struggled in 2013, in spite of being the second-largest DuPont business, based on sales. Its second-quarter sales total of just under $1.8 billion was down 9 percent from the same quarter in 2012, and operating earnings plummeted 56 percent to $264 million in the same comparison.

In the release, officials said the poor showing primarily was a result of price declines in TiO2 and also from lower prices for fluoropolymers and refrigerants, coupled with higher operating costs for those products. The firm's TiO2 volume was up 12 percent in the second quarter.

For the first half of 2013, Performance Chemicals' sales were down 13 percent vs. the year-ago period to less than $3.4 billion. First-half operating earnings were down 56 percent to $515 million.

Teflon is a well-known industry name used in non-stick coatings and high-end industrial applications. TiO2 is a common whitener used in plastics and many other products.

TiO2 generated 46 percent of the unit's sales in 2012, with fluoropolymers chipping in another 17 percent. Based on those percentages and 2012 sales, DuPont's TiO2 business would have annual sales of about $3.3 billion, while fluropolymers would generate about $1.2 billion in annual sales.

Last year also was a difficult one for the unit, with full-year sales coming in at just under $7.2 billion, down almost 8 percent vs. 2011. Operating earnings for 2012 were just over $1.8 billion, down 14 percent vs. 2011.

Companywide, DuPont's first-half sales of $20.5 billion roughly were flat with the year-ago period. But the firm's first-half profit zoomed 64 percent to $4.4 billion.

News of the possible sale and of some staff changes at DuPont had little impact on the firm's per-share stock price, which was up three percent to around $59 in early trading July 23. The stock price is up almost 31 percent so far in 2013.