DuPont Sues Heraeus

Zacks Investment Research
updated | Zacks.com

Science and technology giant  EI DuPont de Nemours & Co. (NYSE:DD), announced that it has filed a lawsuit in Delaware against Heraeus Holding GmbH and Heraeus Materials Technology, LLC related to its front-side metallization paste materials used in solar cell technology.

DuPont alleged that Heraeus has infringed its U.S. Patent, by manufacturing solar cells and inducing its customers to manufacture solar cells, using Heraeus H94XX series and H92XX series front-side silver pastes.

DuPont Solamet product line is the leading technology for metallization in crystalline silicon and thin film solar cells, and has been instrumental in the great efficiency gains of solar power, making it more competitive with other means of electricity generation.

The company invests millions of dollars in research to develop innovative products for its customers and will continue to take appropriate actions to protect its intellectual property assets.

In July 2011, DuPont reported an increase in profit of $1.22 billion or $1.37 per share in the second quarter of 2011 versus $1.16 billion or $1.17 per share in the same quarter of 2010. The profit exceeded the Zacks Consensus Estimate by 4 cents per share.

The improvement in profit was attributable to higher selling prices, increased sales volume and currency benefit, partly offset by higher raw material, energy and freight costs.

Sales in the quarter grew 19% to $10.3 billion, up from the Zacks Consensus Estimate of $9.95 billion. The increase in sales reflected a rise of 2% in sales volume, an increase of 11% in local price, 3% currency benefit and 3% net increase from portfolio changes. Sales in the developing markets rose 29%.

DuPont had cash and cash equivalents of $2.3 billion as of June 30, 2011 compared with $4.3 billion as of December 31, 2010. Long-term borrowings and capital lease obligations amounted to $12.5 billion as of June 30, 2011 versus $10.1 billion as of December 31, 2010.

As of June 30, 2011, DuPont had a net cash flow of $644 million from operating activities versus $424 million as of June 30, 2010. Meanwhile, capital expenditures increased to $741 million from $500 million in the year-ago period.

DuPont upgraded its full-year 2011 earnings outlook to $3.90–$4.05 per share from its previous forecast of $3.65–$3.85 per share. This revision was attributable to the company’s strong earnings results, the expectation for continued global economic growth and about a $.05-per-share full-year operating earnings from Danisco on an underlying basis.  

The company’s estimate for the impact of the Danisco acquisition on full-year reported earnings is at present a reduction of $.18 to $.29 per share, versus the previous estimate of $.30 to $.45 per share. The current view is based on anticipated full-year Danisco operating earnings of about $.05 per share and significant item charges related to the acquisition estimated at $.23 to $.34 per share.

In addition to these Danisco charges, the company expects a $.03 per share significant item charge in the third quarter associated with a licensing agreement.

DuPont is a global chemical and life sciences company, employing more than 60,000 people worldwide with a diverse array of product offerings. With over 21,000 patents and 15,000 patent applications worldwide, DuPont sells its products in diverse markets, such as transportation, construction, apparel, agriculture, nutrition and health, packaging and electronics.

DuPont faces stiff competition from BASF SE (BASFY) and The Dow Chemical Company (NYSE:DOW).

The company currently retains a Zacks #3 Rank on its stock, which translates into a short-term Hold. In addition, we reiterate our Outperform recommendation on the stock for the long term.

 
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