E. I. du Pont de Nemours (also known simply as DuPont) wants to coat your car, feed your crops, and decrease your dependence on fossil fuels. A top US chemical maker (along with Dow and ExxonMobil Chemicals), the company consists of 14 businesses that are divided into nine segments, each of which serves a diverse set of markets. Using its expertise in science-based development, it offers products, materials, and services that are applied in everything from agriculture, apparel, and construction, to electronics, nutrition, and safety. DuPont operates worldwide with most of its sales coming from outside of the US.
DuPont's nine business segments include Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection, and Pharmaceuticals. The company's largest segment, Agriculture, consists of the Pioneer Hi-Bred International and DuPont Crop Protection businesses, offering a slew of products and services aimed at improving crop yields and productivity. Products include Pioneer brand seeds, as well as other insecticide, fungicide, and herbicide brands.
Performance Chemicals (fluorine products and white pigments) and Performance Materials (a wide range of polymers) round out DuPont's top three segments, which all together generate about two-thirds of the company's sales.
DuPont has operations in more than 90 countries worldwide. The majority are located in Europe, while other operations can be found in North America, Latin America, the Middle East, Africa, and Asia. The US and Canada account for about one-third of sales, while the remainder is generated by non-US customers.
Higher selling prices and sales from businesses acquired from Danisco helped drive the company's fiscal 2011 revenues to a 20% increase over revenues in 2010. Sales in developing markets jumped 27% in 2011 over the previous year. Sales in the US were higher for titanium dioxide, seeds, fluroproducts, and electronic products. Worldwide sales showed strong growth in the Agriculture segment, especially in Latin American markets. However, declines in the fourth quarter hurt global sales in the Electronics & Communications, Performance Chemicals, and Performance Materials segments. Demand softened that year for consumer electronics and construction industries.
Net income in 2011 rose nearly 15% over the previous year, reaching $3.5 billion. The increase reflects higher selling prices in the US, higher sales volume and favorable currency translations. These were partly offset by higher costs for raw materials, energy, and freight; increased spending for growth initiatives; and lower pharmaceuticals income due to patent expirations.
DuPont devised a five-year plan in 2010 that set annual growth targets of 7% for sales and 12% for earnings through 2015. The company also plans to get 40% of its sales by 2015 from developing markets, which include China, India, and countries in Latin America, Eastern and Central Europe, the Middle East, Africa, and Southeast Asia.
DuPont's general strategy for growth is to use its expertise in science and technology to launch products that will address global needs for food, cleaner energy (mainly reducing dependence on fossil fuels), and keeping people and the environment safe. The company introduced more than 1,700 products in 2011. However, DuPont is undergoing a shift from being a chemical maker known for paints, plastics, and industrial chemicals to a company that is trying to grow in certain high-growth, high-margin markets, such as agriculture and nutrition, advanced materials, and biotechnology.
Mergers & Acquisitions
To this end, DuPont is buying and selling off some big businesses. In mid-2012, for instance, it agreed to sell one of its larger units, Performance Coatings, to The Carlyle Group for $4.9 billion, as that business focuses on manufacturing paints for cars, trucks, and appliances.
On the acquisition side, DuPont in 2011 shelled out about $6.4 billion to buy Danisco, a global specialty food ingredients and enzyme company. Danisco's businesses bolstered its presence in nutrition and biosciences. To further position itself as a global leader in the specialty food ingredients market, DuPont subsequently in 2012 acquired full ownership of Solae, a joint venture formed in 2003 with Bunge. Solae has been a global leader in developing soy-based ingredients. Solae and Danisco's food ingredients business fall under Dupont's growing Nutrition & Health segment.
DuPont made a move in 2011 to expand further into clean energy by acquiring Innovalight, which specializes in advanced silicon inks and process technologies that increase the efficiency of crystalline silicon solar cells. The deal is designed to strengthen DuPont's position in the solar energy market, where it made $1 billion in 2010 and aims to double that by 2014.
Additionally, to meet demand for high-margin products with growth potential, the company made two major expansions at US production sites in 2011 for its Kevlar-brand aramid fiber (used for protection technologies such as bullet-resistant vests) and its Tedlar-brand film (used in photovoltaics for solar energy). – less