Chemical company DuPont (DD, Financial) has leveraged AI technologies to achieve better-than-expected Q3 earnings and raise its FY24 EPS guidance. After ten quarters of year-over-year revenue declines, DD has posted consecutive quarters of positive growth, with Q3 revenue increasing by 4.4%, up from 2.5% in the previous quarter.
Key highlights include:
- The Electronics & Industrial segment is driving growth, with organic sales up 10% in Q3, led by a 20% increase in Semiconductor Technologies, which provides materials for semiconductor fabrication and packaging.
- The 20% growth in Semiconductor Technologies is due to rising AI-related technology demand, a recovery in consumer electronics, and stronger demand in China.
- In the Water & Protection segment, demand for medical packaging products increased, with net sales declining by only 2%, compared to a 7% decrease last quarter. Medical packaging sales grew 10% sequentially, offsetting weakness in Shelter Solutions.
- Improved top-line growth led to a 150-bps increase in Operating EBITDA margin to 26.8%, surpassing Q3 EPS expectations and prompting an FY24 EPS guidance increase to $3.90 from a prior range of $3.70-$3.80.
- CEO Lori Koch, appointed in May 2024, stated that the company is progressing on its business separation plan, which involves separating the Electronics business from the Water business, with completion expected within the next 18 months.
DuPont's exposure to the semiconductor industry is driving a turnaround after years of revenue decline. The emergence of AI and lower interest rates are anticipated to further support growth, particularly in the Shelter Solutions business.
