DuPont Reports Solid Third Quarter Results; Emerging Markets Sales Grow 25 Percent

Highlights

-- Third quarter 2008 earnings per share were $.40, including a hurricane- related charge of $.16 per share. Excluding significant items, earnings were $.56 per share compared to $.59 per share in the third quarter 2007.

-- Sales increased 9 percent to $7.3 billion, reflecting 9 percent higher local selling prices, a 4 percent currency benefit and 4 percent lower volume. Continuing growth in emerging markets, where sales increased 25 percent, contributed to 16 percent sales growth outside the United States.

-- Higher selling prices more than offset a 16 percent increase in raw material, energy and freight costs.

-- Agriculture & Nutrition sales grew 22 percent, reflecting strong demand in the southern hemisphere.

-- For the nine months ended September 30, 2008, earnings per share were $3.05, up 13 percent excluding significant items.

-- The company provided fourth quarter 2008 earnings guidance of $.20 to $.25 per share which reflects continuing hurricane-related business interruption impacts of about $.10 earnings per share and expected weakening demand in North American and Western European markets.

-- The company revised its full-year 2008 earnings outlook to a range of $3.25 to $3.30 per share, excluding significant items. The previously provided full-year outlook was a range of $3.45 to $3.55 per share.

"Our businesses performed well in the third quarter despite hurricanes and slower economies around the world, reflecting the strong position of our science-based products in production agriculture, photovoltaics and emerging markets," said DuPont Chairman and CEO Charles O. Holliday, Jr.

Weather-Related Impacts

The company recorded a one-time pre-tax charge of $227 million or $.16 per share in the third quarter for costs associated with clean up, restoration of manufacturing operations, and lost inventory resulting from hurricanes. Storm surge caused significant damage at the company's plant in Orange, Texas. The company declared "force majeure" for ethylene copolymers and certain other ethylene-based product lines. In addition to the $.16 per share charge, the company estimates business interruption impacts from the hurricanes at about $.02 per share in the third quarter and about $.10 per share for the fourth quarter.

Global Consolidated Sales and Net Income

Consolidated net sales grew 9 percent to $7.3 billion. Sales outside the United States grew 16 percent and accounted for 68 percent of worldwide sales. Sales in emerging markets grew 25 percent. A 9 percent increase in local selling prices more than offset lower global sales volumes resulting from weak demand in motor vehicle and construction-related markets, and hurricane disruptions. The table below shows worldwide and regional sales performance of third quarter 2008 versus third quarter 2007.

Net income for third quarter 2008 was $367 million versus $526 million in the prior year. Excluding the hurricane charge in the current quarter and a prior-year litigation charge, net income was $513 million versus $552 million in the prior-year quarter.

Earnings Per Share

The table below shows the variances in third quarter 2008 earnings per share (EPS) versus third quarter 2007, excluding significant items. The 5 percent decline in earnings per share, excluding significant items, principally reflects higher costs for raw materials, energy and freight, lower sales volume and spending for growth initiatives. Higher selling prices, favorable currency and lower taxes contributed to earnings in the quarter.

Segment pre-tax operating income (PTOI) was $682 million, down 26 percent versus third quarter 2007, as shown in the table below. Excluding significant items, total segment PTOI for third quarter 2008 was $909 million versus $956 million in the prior year, down 5 percent.

The following are business segment highlights comparing sales and PTOI for third quarter 2008 versus third quarter 2007.

Agriculture & Nutrition

-- Sales grew 22 percent to $1.3 billion due to herbicide pricing, strong demand for fungicides and insecticides in Brazil, increased seed share and acres in Brazil, and strong demand for oilseeds in Europe. Pricing gains and favorable currency across the segment more than offset crop protection portfolio changes.

-- Seasonal third quarter pre-tax operating losses improved from $96 million in the prior year to the current $21 million. The $75 million PTOI increase is principally due to higher sales and a $49 million gain on the settlement of soybean contracts, partly offset by spending for growth initiatives. Third quarter 2007 included a $25 million benefit from a contract termination payment.

Coatings & Color Technologies

-- Sales of $1.8 billion were up 7 percent. Higher USD selling price and volume growth in Asia and Latin America more than offset lower volumes in North America and Europe.

-- PTOI of $190 million was down 7 percent. Cost productivity, pricing improvements, and favorable currency only partially offset the impact of weak automotive and housing markets and higher raw material, energy and freight costs.

Electronic & Communication Technologies

-- Sales grew 13 percent to $1.1 billion, with strength in fluoropolymers and microcircuit materials for photovoltaic applications partially offset by weakness in automotive and consumer electronics. Strong sales in Asia were moderated by softening demand in Europe.

-- PTOI of $137 million was essentially flat versus last year as increased revenue was offset by higher ingredient costs and growth investments for photovoltaics.

Performance Materials

-- Sales grew 3 percent to $1.7 billion, with price gains offsetting lower demand. Volume decline reflects market softness and impact of the hurricanes.

-- A $91 million pre-tax operating loss included a $216 million hurricane charge. Excluding this charge, PTOI declined 36 percent to $125 million due to weak markets, weather-related business interruptions and rising raw material costs that were not fully offset by higher prices.

Safety & Protection

-- Sales of $1.5 billion were up 9 percent versus the prior year quarter. Pricing gains particularly in chemical products, favorable currency and broad- based growth in emerging market volumes were tempered by weakness in the housing market.

-- PTOI of $251 million was down 20 percent. Earnings growth in chemicals and services was more than offset by lower earnings due to weak housing markets and growth investments in Kevlar(R) and Nomex(R) expansions.

Additional information on segment performance is available on the DuPont Investor Center web site at

Outlook

The company expects fourth quarter 2008 earnings to be in the range of $.20 to $.25 per share, excluding significant items. The outlook includes expected earnings impact of about $.10 per share from hurricane-related business interruptions, principally the loss of production and sales from the company's Orange, Texas plant. The outlook also reflects expected weakening demand in North American and Western European markets. Based on the fourth quarter estimate, the company expects to earn between $3.25 and $3.30 per share for the full year 2008, excluding significant items. Comparable full- year 2007 earnings were $3.28 per share. The company's previous outlook, issued July 22, 2008, was $3.45 to $3.55 per share.

"Our leadership teams around the world are actively engaged with customers and suppliers, making appropriate and timely adjustments to any changes in demand," Holliday said. "We enter these challenging times in a better position than any prior economic slowdown. Our cash position, borrowing capability, and balance sheet are strong and we remain intensely focused on our operating cash flows."

Use of Non-GAAP Measures

Management believes that certain non-GAAP measurements, such as income excluding significant items, are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in Schedule D.

DuPont is a science-based products and services company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; building and construction; communications; and transportation.