DuPont stock dives as weak China, inventory cuts prompt profit warning

By Tomi Kilgore

The maker of Kevlar, Tyvek and Styrofoam products will book a charge of up to $850 million in Q4 for goodwill impairment

Shares of DuPont de Nemours Inc. tumbled Wednesday, toward their worst day in nearly four years, after the materials science company issued a profit warning, as the weaker demand seen at the end of 2023 is expected to continue.

The stock (DD) sank 11.9% toward an eight-month low in premarket trading. That puts it on track to suffer the biggest one-day selloff since it plummeted 13.2% on March 9, 2020, at the height of the pandemic panic.

"As we finished 2023, we saw additional channel inventory destocking within our industrial businesses as well as continued weak demand in China," said Chief Executive Ed Breen.

"We are seeing similar trends continue and expect sequential sales and earnings to decline in the first quarter of 2024," Breen added, as some "discrete items" that benefited underlying profitability in the fourth quarter will be absent.

The company, which makes Kevlar, Tyvek and Styrofoam branded products, said it expects first-quarter adjusted earnings per share, excluding nonrecurring items, of 63 cents to 65 cents. That's down from 84 cents in the same period a year ago and well below the current FactSet consensus of 88 cents.

Sales for the current quarter are expected to fall to $2.8 billion from $3.02 billion last year, while the FactSet consensus was for an increase to $3.04 billion.

For the fourth quarter, the company expects to report adjusted EPS of 85 cents to 87 cents, compared with the FactSet consensus of 85 cents, and sales of approximately $2.9 billion, or slightly below expectations of $3.0 billion.

Separately, DuPont said it expects to record a goodwill impairment charge of $750 million to $850 million in the fourth quarter, related to the merger between Dow and DuPont.

Dow and DuPont had merged in 2017, then split into three companies in 2019: DuPont, Dow Inc. (DOW) and Corteva Inc. (CTVA).

The company said it will provide more detail on fourth-quarter results and the 2024 outlook when it reports fourth-quarter results on Feb. 6.

The stock has gained 2.6% over the past three months through Tuesday, while the S&P 500 has rallied 14.5%.

-Tomi Kilgore

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01-24-24 0749ET

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