DuPont chair and CEO Ellen Kullman will retire from the company, effective 16 October. Former Tyco International CEO Edward Breen, who joined DuPont’s board in February, has been named interim chairman and CEO. DuPont’s board has retained an executive search firm to assist in finding a permanent replacement.
Kullman’s departure follows five months after DuPont prevailed in a proxy fight against activist Trian Partners and founder Nelson Peltz. Trian, which attempted to gain four DuPont board seats, had criticized DuPont for missing financial targets and also called for a further break-up of DuPont beyond the recent divestment of Chemours. Trian maintained a 2.7% DuPont stake at the of the second quarter, according to regulatory filings. Trian declined comment on today’s changes.
DuPont also cut its second-half 2015 earnings guidance on Monday, citing the impact of a stronger dollar and slumping agricultural markets. DuPont said it will accelerate a $1.3-billion restructuring program already underway in response to the weaker outlook..
“With the separation of Chemours completed and a strong foundation for growth in place, the board and I believe now is right time for a new leader to guide company phase through next phase of growth.” Kullman said on an investor call following the announcement on Monday.
DuPont on Monday also forecast second-half operating earnings of 40 cts/share, 47% below guidance issued in late July. “Demand for crop protection and seed products, primarily in Brazil, further weakened in the third quarter impacted by macroeconomic and competitive pressures,” DuPont said. “In Brazil, where the planting season is in progress, tighter farmer profit margins and credit are causing growers to be more cautious in their spending. The company is experiencing reduced demand for crop protection products reflecting low insect pressure and lower seed volumes as growers are expected to reduce hybrid corn planted area.”
The company now expects to hit its annualized cost saving target of $1.3 billion by the end of 2016, one year ahead of schedule. The program will be expanded to total savings of $1.6 billion by the end of 2017. Plans related to the additional cuts are expected to be finalized in the fourth quarter, DuPont said. “Looking ahead, we will continue to drive productivity, and we plan to conduct a deep dive into the details of our cost structure and allocation of capital to ensure we deliver appropriate returns for shareholders,” Breen said in a statement.
Over the past seven years as CEO, Kullman has shifted DuPont’s portfolio to focus on agriculture and nutrition, industrial biotech and certain higher-value chemical and materials businesses in electronics, engineering plastics, and safety and protection. The company divested its coatings business in 2013 and spun off performance chemicals, including titanium dioxide and fluorochemicals, to shareholders in July. Key acquisitions under Kullman included Danisco in enzymes and Pannar in seeds.
“We have reshaped our organization to make it more competitive, while making important investments in R&D that have made a real difference to our customers and created a robust pipeline of opportunity,” Kullman said in a letter to DuPont employees announcing her retirement. “It has not been an easy road but I could not be more proud of all we have accomplished together. Our work has brought us to the cusp of DuPont’s next great era of innovation and growth.”
DuPont has named Breen “interim executive officer” as of 6 October reporting to the board. Breen will then assume the role of interim chair and CEO on 16 October. Breen has been chairman of Tyco since July 2002 and served as Tyco CEO from July 2002 to September 2012. Prior to joining Tyco, Breen held senior management positions at Motorola, including as president and COO.
By Robert Westervelt
Source: Chemical Week
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