Industrial materials maker DuPont, known for making paint for automobile industry, said on Tuesday its second-quarter would be the “low point” of the year as the COVID-19 pandemic slams the brakes on global vehicle sales, hurting the company’s automotive business.
The industrial giant is heavily exposed to the auto industry, which was hard-hit by the U.S.-China trade war even before lockdowns imposed to arrest the spread of the virus emptied roads and shuttered car showrooms.
The company said it recorded a low-to-mid-teens percentage fall in April sales from last year’s levels. “As we see it now, the second quarter should be the low point,” said Chief Financial Officer Lori Koch on a conference call with analysts.
“I think mid-teens down on revenue is probably the bottom of what we’re seeing, based on what we know as of today,” Chief Executive Officer Ed Breen said.
He said DuPont expects continued demand for its products like protective gowns and food ingredients but that is “expected to be more than offset by the well-known softness in automotive, aerospace, oil and gas and other industrial markets.”
Sales in its transportation and industrial segment (T&I) fell 13% in the first quarter, weighed down by lower volumes and a fall in prices for nylon, a stiff plastic used in making auto parts and industrial equipment. DuPont expects nylon prices to continue to decline sequentially into the current-quarter.
The company, which undertook a cost savings program to battle challenging market conditions, doubled its target to $180 million for the year from $90 million and slashed capital expenses by $500 million.
The Wilmington, Delaware-based company, one of three parts into which chemical conglomerate DowDupont was split into last year, had earlier suspended its full-year forecast, citing uncertainties caused by the pandemic.
DuPont’s stock, which has lost nearly 30% this year, rose about 4% in morning trade after it reported first-quarter adjusted earnings of 84 cents per share, beating analysts’ average estimates of 75 cents.
