DuPont (DD) Gears Up For Q3 Earnings: What's In The Cards?
Zacks Investment Research | Oct 29, 2019 08:56AM ET
DuPont de Nemours, Inc. (NYSE:DD) is scheduled to come up with its third-quarter 2019 results before the opening bell on Oct 31. The company’s results are expected to reflect the impact of weak demand. However, it is likely to have benefited from its cost and productivity actions in the quarter.
DuPont delivered a positive earnings surprise of roughly 12.8% in the second quarter. It benefited from its cost and pricing actions in the quarter.
The company’s shares are down around 7.5% over the past three months, compared with the roughly 2.1% decline recorded by the industry .
Let’s see how things are shaping up for this announcement.
Factors to Watch For
DuPont, in its second-quarter call, said that it expects weak demand in its short-cycle businesses, especially in automotive and semiconductor, to continue in the back half of 2019.
For the third quarter, DuPont expects low-single digit decline in organic net sales on a year over year comparison basis. The company also sees adjusted earnings in the range of 94-99 cents per share for the quarter.
The Zacks Consensus Estimate for revenues for the third quarter for DuPont is currently pegged at $5,410 million.
Soft demand is expected to have impacted the company’s organic sales in the third quarter. DuPont faces headwind from weak demand across some of its businesses. Demand weakness in the semiconductor market is affecting volumes in the company’s Electronics & Imaging business unit. Moreover, softness across automotive and electronics end markets are hurting its volumes and sales in Asia Pacific and EMEA regions. Weakening global economic conditions and trade tariffs are affecting demand.
The company is also likely to have faced some pricing pressure in the third quarter, affecting its sales. DuPont expects pricing weakness through the second half as a result of the supply-demand imbalance.
Moreover, higher manufacturing costs are likely to have weighed on margins in the third quarter. The company sees manufacturing costs to increase across some its segments in the quarter. Notably, DuPont expects increased plant turnaround expenses to push up manufacturing costs in its safety and construction unit.
However, benefits of cost synergy savings and the company’s productivity actions are expected to get reflected on third-quarter results. The company is taking additional cost and productivity improvement actions, which are likely to have contributed to its bottom line in the September quarter.
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