February 18, 2002
Volume 80, Number 7
CENEAR 80 7 p. 9
ISSN 0009-2347
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Company will shed fibers and revamp the rest of its business


In its 200 years in business, DuPont has never been reluctant to transform itself. Now, at the beginning of its bicentennial, the company is planning its boldest move in decades: a spin-off of its fibers businesses--including nylon, polyester, and Lycra spandex--by the end of 2003.

These businesses have been nearly synonymous with DuPont for most of the 20th century. DuPont's nylon fibers business began with Wallace Carothers, a chemist the company spirited away from the Harvard University faculty. His research team invented nylon, and DuPont demonstrated it at the 1939 World's Fair in New York City.

The fibers disposal is half of a restructuring of the entire company as it heads into its third century. The other half is a realignment of DuPont's far-flung and narrowly focused businesses into five "growth segments": electronics and communications, performance materials, coatings and white pigments, safety and protection products, and agriculture and nutrition.

For example, the new model will marry DuPont's automotive coatings and TiO2 pigment units. The idea is to group together businesses with similar end uses and generate profit-making cross-fertilization. The company's goal is 10% annual growth in earnings per share, starting in 2003, along with 6% growth in revenues.

"We have been in the process, throughout the last year, of analyzing each one of our businesses and determining what the real competitive position is," says Charles O. Holliday Jr., DuPont's chairman and CEO. "The current recession has allowed us to see even clearer, and maybe faster."

The restructuring and fibers spin-off are the latest of a series of changes DuPont has been making over the past several years, including the spin-off of the oil company Conoco, the sale of its pharmaceutical business to Bristol-Myers Squibb, and the purchase of seed company Pioneer Hi-Bred.

John C. Moten, a stock analyst with Deutsche Banc Alex. Brown, says DuPont now wants to find business opportunities that its old structure may have missed, a change from using deal-making to the same end. "In much of the 1990s, the company was looking outside of DuPont for answers, and now it's looking inside of DuPont for answers as well. The business grouping really reflects that type of thinking."

In restructuring its fibers business, DuPont will group polyester, nylon, spandex, and related intermediates together in a single fibers company called, for now, DuPont Textiles & Interiors. DuPont says it will be the largest integrated fibers company in the world, with about $6.5 billion in annual sales and 22,000 employees. It will have, DuPont maintains, a number one position in 80% of the markets it serves. Richard R. Goodmanson, executive vice president and chief operating officer of DuPont, will head the new business.

Holliday says the growth will come from cross-fertilization and through a new commitment to the market. "What our customers have seen is us just shutting down plant after plant and withdrawing from these fiber businesses," he says. "They were not sure about our commitment. Now our commitment is clear."

Still, it is the end of an era, Moten notes. "It is the equivalent of GE saying, 'We're not going to make lightbulbs anymore,'" he says.


Meet The New DuPont

Sales: $4.9 billion
Divisions: DuPont Performance Coatings, DuPont White Pigment & Mineral Products
Sales: $4.7 billion
Divisions: DuPont Engineering Polymers, DuPont Packaging & Industrial Polymers, DuPont's interest in the DuPont Dow Elastomers and DuPont Teijin Films joint ventures
Sales: $4.3 billion
Divisions: DuPont Crop Protection, Pioneer Hi-Bred International, DuPont Nutrition & Health
Sales: $3.6 billion
Divisions: DuPont Safety Resources, DuPont Advanced Fiber Systems, DuPont Nonwovens, DuPont Chemical Solutions Enterprise, DuPont Surfaces
Sales: $2.7 billion
Divisions: DuPont Electronic Technologies, DuPont Displays Technologies, DuPont Imaging Technologies, DuPont Fluoroproducts
NOTE: Segments do not include the new $6.5 billion DuPont Textiles & Interiors subsidiary, which DuPont intends to split off, possibly through an initial public offering, by the end of 2003. SOURCE: DuPont

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