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DuPont issues 2Q warning
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July 2, 2001: 4:46 p.m. ET
Manufacturer blames economic slowdown for sluggish worldwide output
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NEW YORK (CNNfn) - DuPont became the latest victim of the slowing U.S. economy Monday as it warned that second quarter earnings will fall short of Wall Street expectations as a manufacturing slowdown spreads to overseas plants.
The Wilmington, Del.-based diversified manufacturer, which reports results on July 25, now expects second quarter earnings between 35 cents and 45 cents a share, sharply lower than the 53 cents a share consensus forecast of analysts surveyed by earnings tracker First Call.
"The global economic slowdown that has forced U.S. manufacturing capacity utilization to levels equal to the 1982 recession is now expanding to Europe, South America, and parts of Asia," DuPont Chairman Charles Holliday said. "Demand is correspondingly weak across all markets, and our customers have continued to draw down existing inventories or delay purchasing until conditions improve."
Holliday also said the strong U.S. dollar presents "huge competitive challenges" for U.S. exporters, many of whom are DuPont customers.
As demand for products slowed over the last year, manufacturers have been stuck with excess inventory and fewer or cancelled orders, eating into profits. Rising raw material costs, particularly for energy, also impacted earnings.
In April, DuPont unveiled a restructuring plan that included slashing 4 percent of its workforce. The company expects the job cuts to provide a cost savings in the second half of 2001. In addition, DuPont said it planned to reduced capital spending to $1.6 billion from $2 billion in 2001.
Despite the cuts, Holliday remained optimistic that the slowdown is nearing its end.
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"Recent movements in long-leading economic indicators and in raw material prices offer hope that an end to the spreading global downturn is in sight," Holliday said. "Despite that, we continue to take actions necessary to emerge from these difficult times as a much stronger company."
DuPont (DD: Research, Estimates) shares ended down 12 cents at $48.12 Monday. 
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