DuPont edges higher after dividend hike, sees chip market bottoming out

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DuPont edges higher after dividend hike, sees chip market bottoming out
Credit: © Reuters.

By Geoffrey Smith -- DuPont (NYSE: DD ) stock rose just under 1% in premarket on Tuesday after the chemicals company raised its dividend and said it saw a light at the end of the tunnel for its chipmaking customers.

Chief financial officer Lori Koch said DuPont expects sales volumes to fall at its division serving consumer electronics and chipmakers in the first half of the year, with its Water & Protection business also suffering from weaker construction activity.

She forecast an improvement toward the end of the year as demand stabilizes at lower levels, with an expected rebound in China helping to shore up the group’s numbers.

For the current quarter, DuPont said it expects adjusted earnings per share of around 80c, down some 2% on the year, with earnings before interest, taxes, depreciation and amortization of $710 million on revenue of $2.9 billion.

For the full year, it sees EPS between $3.50 and $4.00, on revenue of around $12.6B.

DuPont is at a crossroads after having to scrap its proposed acquisition of advanced materials group Rogers (NYSE: ROG ), which would have accelerated its makeover as a group focused on electric vehicles and 5G technologies. Chinese antitrust regulators failed to approve the deal last year, causing DuPont to pay a $163M break fee.

Despite that setback, DuPont's fourth-quarter earnings beat expectations, coming in at 89c a share, up 16% from a year earlier, helped by a reduced share count. The dollar’s strength and the disposal of most of its mobility and materials division depressed reported revenue, but organic sales were up 4%, thanks to a 7% rise in prices.

It raised its dividend by 9% to 36 cents accordingly.

Revenue at the electronics and industrial unit, which largely serves the semiconductor segment, was down 2% in year-on-year terms in the fourth quarter, reflecting a high level of inventory and a need for destocking in the sector. Koch said DuPont expects that process to bottom out by the middle of the year.

By 08:20 ET (13:20 GMT), Dupont stock was up 0.9% in premarket trading.

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