Chemicals maker DuPont Co. said Wednesday it plans to cut 1,500 jobs and close four facilities in Europe in a restructuring of its performance coatings business and raised its overall earnings outlook. Its shares rose nearly 3 percent.
DuPont officials said the restructuring, which will take about 18 months to complete, will reduce annual costs by about $165 million. The Wilmington-based company anticipates taking a pretax charge up to $165 million in the first quarter, with additional costs of up to $55 million over the next year.
The jobs targeted for elimination constitute about 15 percent of the workforce in DuPont’s peformance coatings division, which provides paint finishes to the automotive industry. The division also produces a variety of industrial powder coatings and maintenance finishes.
In a separate announcement, the company raised its first-quarter profit guidance to 80 cents per share, up from a January estimate of 70 cents per share. For 2006, DuPont revised its earnings estimate to $2.70 a share, up 10 cents from its earlier projection.
The revised quarterly and full-year guidance excludes the $165 million pretax charge related to the restructuring plan, officials said.
Analysts polled by Thomson Financial had forecast per-share profit, excluding special items, of 71 cents in the first quarter and $2.64 for the year.
Dupont chairman and chief executive Charles Holliday Jr. said the revised guidance estimates are not related to the restructuring plan, but are based instead on improved operating performance, fixed cost controls, and the earlier-than-expected restart of production at a hurricane-damaged titanium dioxide plant in DeLisle, Miss.
Holliday said that with the restructuring of its underperforming performance coatings business, DuPont is sending a message to industry analysts who have said the company needs to execute its plans to improve productivity and competitiveness.
DuPont officials said restructuring will include the closings of two manufacturing plants in Spain, one plant in the Netherlands, and a laboratory in Germany. In addition to those four operating facilities, the company also will close one warehouse in Germany and another in the United States, and consolidate two other U.S. warehouses in a new location.
DuPont announced last month that it was closing an automotive coatings lab in Troy, Mich., and eliminating 200 positions there.
Holliday said the “great majority” of the 1,500 job cuts announced Wednesday will be in Europe, although he did not have specific numbers.
Officials said DuPont will try to redeploy as many of the affected employees as possible elsewhere within the company.
In addition to the job cuts, DuPont said it plans to consolidate manufacturing and technical assets and tailor market strategies to key customers and segments.
Holliday said that while performance coatings is a core business for DuPont, market conditions over the past three years have resulted in the unit performing below the company’s goal for each business unit to show at least a 12 percent return on net assets.
The restructuring is expected to result in savings of about $70 million this year, which will be largely offset by accelerated depreciation. Another $100 million in cost savings is expected in 2007.
While DuPont has focused recently on growth industries such as bio-based materials, chief financial officer Gary Pfeiffer downplayed suggestions that the company should consider divesting itself of performance coatings. Having a balanced portfolio of businesses with cash generation capacity and businesses with growth capacity is economically advantageous, he said.