DuPont to cut 800 jobs in agricultural business

Herbicide, pesticide unit hurt by weaker demand, increased competition

Chemical industry

July 02, 1999|By BLOOMBERG NEWS

WILMINGTON, Del. -- DuPont Co., the biggest U.S. chemical company, said yesterday that it will cut 800 jobs in its agricultural chemicals business, or about 15 percent of the unit's work force, to trim costs and boost profit.

The cuts would result in pretax savings of $200 million annually in DuPont's crop protection business, which makes herbicides, fungicides and insecticides used on soybeans, corn and other grains, the company said. DuPont expects to take an unspecified third-quarter charge for the job cuts and is also considering writing off assets.

The crop protection business has suffered from reduced demand for farm exports and a weaker farm economy, problems that have led rivals Novartis AG and American Home Products Corp. to consider selling their agriculture units. Farm chemical makers have also been losing market share to Monsanto Co.'s Roundup herbicide and bio-engineered Roundup Ready seeds.

"For the agricultural chemical business, the game has changed. Ag-biotech has really turned the industry upside down," said William Fiala, an analyst with Edward Jones.

DuPont shares rose $1.44 to close at $69.75.

DuPont is making its own bet with biotechnology, buying Pioneer Hi-Bred International, the world's largest seed company, as part of a strategy of shifting from a pure chemicals company to a life-sciences business.

It also plans to issue a new class of stock next year to track the performance of its life-sciences business, including drugs, biotechnology and agriculture.

The $7.7 billion Pioneer acquisition and the plan for the new tracking stock make it necessary for DuPont to reduce costs and maximize profits in other parts of its life-sciences business, including agricultural chemicals, analysts said.

Company officials said in a conference call they were not abandoning the crop protection business and were one to two years away from launching three new products, including a new herbicide, insecticide and fungicide.

The Wilmington, Del.-based company has not determined which positions or locations will be affected by the job cuts.

DuPont's earnings from continuing operations fell 4.2 percent in the first quarter to $749 million, or 66 cents per share. Profits from the agriculture and nutrition unit rose 2.2 percent in the quarter to $91 million.

Pub Date: 7/02/99

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