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The Patriot Ledger, Quincy, MA
Jan 26, 11:12 AM EST

DuPont reports 4Q loss, steps up cost cuts ahead of Dow deal


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DOVER, Del. (AP) -- DuPont Co., pursuing a merger with Dow Chemical, tipped to a fourth-quarter loss as volumes declined and the strong dollar weighed on results.

The company is ratcheting up spending cuts ahead of the deal, announcing it expects about $730 million in cost reductions by the end of the year. It's laying off about 10 percent of its global workforce of more than 60,000 people.

DuPont booked a $798 million restructuring charge, incorporating $656 million of severance and related benefit costs during the quarter.

Sales fell across all business segments and in all regions, mostly because of negative currency impacts, although volumes declined in North America, as well as the Europe, Middle East and Africa region.

The electronics and communications unit had a sales decline of 14 percent. Sales fell 11 percent in the agriculture and also the performance materials segments. All three units also saw full-year sales decline by double-digit percentages.

The Wilmington, Delaware, chemical company on Tuesday reported a loss of $253 million, or 29 cents per share, for the quarter ending Dec. 31, compared to a profit of $683 million, or 75 cents per share, for the same period in 2014.

Operating earnings adjusted for nonrecurring costs and discontinued operations were $239 million, or 27 cents per share, in line with Wall Street analyst estimates but down from $519 million, or 57 cents per share, in the previous year.

Net sales totaled $5.3 billion, down from $5.8 billion in the previous year.

For the full-year, DuPont reported net income of $1.95 billion, or $2.17 per share, compared to $3.6 billion, or $3.95 per share, in 2014. Net sales for the year declined 12 percent to $25.1 billion. Operating earnings for the year totaled $2.77 per share, down from $3.36 per share in the prior year.

DuPont expects to close the Dow Chemical deal to close in the second half of this year, but it faces a significant review from regulators. The combined company, DowDuPont, will be separated into three independent, publicly traded companies through tax-free spin-offs.

"We are making progress on key initiatives, including further improving our cost structure and restructuring our organization to enhance our competitiveness," said DuPont chairman and CEO Ed Breen. ".... Our merger process is on track. We are meeting key milestones and have begun our planning to create three strong, highly focused, independent businesses in agriculture, material science and specialty products."

Dow and DuPont have said the specialty products business will be based in Wilmington, while the material science business will be based in Dow's hometown of Midland, Michigan. Breen said Tuesday that the headquarters for the agriculture business would be announced in the next few weeks.

DuPont expects full-year operating earnings for 2016 in the range of $2.95 to $3.10 per share.

Shares of DuPont Co., have fallen 20 percent since the beginning of the year, while the Standard & Poor's 500 index has decreased 8 percent. The stock has dropped 28 percent in the last 12 months.

DuPont shares were up 96 cents at $53.35, or 1.7 percent, to $53.95 in morning trading Tuesday. Its shares are down more than 23 percent over the past year.

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