DuPont Intensifies Market Orientation as a Key Factor Driving Sustainable Growth
Monday, June 04, 2001
WILMINGTON, Del., June 1, 2001 – At a meeting here today for securities analysts and investors, DuPont Chairman and Chief Executive Officer Charles O. Holliday, Jr., highlighted the company's actions to intensify its market focus on unmet needs which can be served by DuPont proprietary technologies, products and services. Citing the breadth of the company's reach in world markets, Holliday confirmed that DuPont, through its contributions to numerous value chains, is involved in markets which comprise over half of the world's gross domestic product (GDP). As the company gains momentum in implementing its strategies to achieve long-term sustainable growth, the fundamental drivers will be intimate knowledge of customer needs and market – focused renewal of science and innovation. Highlights included: Driving Sustainable Growth At the meeting, DuPont reinforced how the company will drive growth via three strategic pathways – integrated science, knowledge intensity and productivity – transforming the existing DuPont portfolio of businesses into a richer mix that will deliver sustainable growth. DuPont is implementing a disciplined innovation process across the company that strongly links its research and development efforts to the marketplace. "Science is the cornerstone of our ability to build and sustain a richer mix of businesses," Holliday said. "We are focusing on market needs for electronics and high-performance materials, while we invest in new technology platforms such as plant science and biomaterials. The company has a strong pipeline that is sufficient to meet growth targets." "At the same time, we are pursuing a 'knowledge intensity' business model, which leverages the value of our market knowledge, our brands, our technology and know-how. This is being accomplished while also using Six Sigma to enhance productivity, build marketplace competitiveness and grow revenues," Holliday said. DuPont Executive Vice President and Chief Operating Officer Richard R. Goodmanson discussed differential business management strategies and targets at the individual business level. Goodmanson described the company's portfolio in terms of growth targets and focused particular attention on those businesses where growth is most challenging. He emphasized how integrated science, knowledge intensity and Six Sigma would contribute to the achievement of the goals and described the rigorous management process DuPont has put in place to monitor progress against growth goals. "We are confident that we have the detailed, differentiated plans in place to manage each of our business units to get us where we need to be, so that by 2003 we will be on the growth trajectory we've targeted," said Holliday. Focus on Markets DuPont speakers focused on four major market segments into which DuPont supplies a host of products that deliver both basic materials and innovation. For instance, DuPont sold $3.5 billion of paint, nylon, solid surface materials, nonwovens and other materials into construction markets in 2000, and another $5.8 billion of performance coatings, engineered polymers, elastomers and other materials into global automotive markets. "Although neither is a traditional 'growth' industry," Holliday said, "both have considerable room for growth for the innovative materials and product extensions that DuPont has traditionally supplied from our market-focused research and development efforts." A significant growth market discussed was Electronics, where DuPont is the third largest global supplier of materials for the information, communications, semiconductor and related industries. The company highlighted the innovation which DuPont electronic materials brings to numerous industry applications and discussed two new proprietary developments: fluoropolymer binder resin technology to enable 157 nanometer microlithography, and poly-organic light emitting diodes for applications in flat and flexible panel displays. "With $2.5 billion in sales to the electronics industry last year, the DuPont presence in this critical market is already strong, with a large growth potential ahead," Holliday said. Also discussed was the healthy food market – a new growth opportunity for DuPont. In the last six months, DuPont Nutrition and Health soy protein has been introduced in mainstream food products by a number of consumer food companies. During today's meeting, the company announced plans to launch a new consumer brand for one of its soy ingredient products that will be marketed broadly for use in food and nutrition markets. DuPont also highlighted 8th Continent soy milk – soon to be introduced by the 8th Continent joint venture recently formed by General Mills and DuPont – which incorporates the newly branded DuPont soy ingredient to deliver better tasting nutrition for the consumer. Financial Outlook Chief Financial Officer Gary M. Pfeiffer outlined plans to address ongoing macroeconomic challenges. DuPont will continue to focus cost management differentially, with an emphasis on growth; manage cash effectively; and leverage productivity effectiveness through restructuring, improved sourcing initiatives and results from Six Sigma. He stressed that the company will also continue to fund growth initiatives; stay focused on a strong balance sheet position; maintain financial flexibility to meet the company's share buyback commitment; and seek opportunities for bolt-on, non-dillutive acquisitions. Pfeiffer said DuPont expects continuing challenges in the second quarter based largely on demand pressure on businesses that sell into markets that are sensitive to discretionary spending and on softening conditions outside the United States. He also noted that the number of employees affected by the company's recent restructuring announcement will be somewhat larger than originally estimated with more details to be provided when the company announces its second quarter earnings results. While emphasizing uncertainties around the timing of an economic upturn, Pfeiffer believes that the operating environment in the second half of 2001 will be somewhat weaker than the conditions observed in the last half of 2000. Looking ahead, he was optimistic about prospects for 2002. If a recovery occurs, DuPont should experience strong revenue and earnings growth from improvement in volume and mix as well as a positive impact from relatively lower raw material costs, he said. Holliday and his leadership team reinforced the company's continuing commitment to transforming DuPont into a sustainable growth enterprise by renewing and extending its science base while accelerating knowledge intensive business models and improving productivity through Six Sigma.