dupont credit suisse presentation for 9-19-13 final
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Ellen Kullman Chair of the Board & Chief Executive Officer
E. I. du Pont de Nemours & Company
Credit Suisse Chemical and Ag Science Conference
September 19, 2013 New York City
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Regulation G The attached charts include company information that does not conform to generally accepted accounting principles (GAAP). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the company and allows investors to better evaluate the financial results of the company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with previously published company reports on Forms 10-K, 10-Q, and 8-K. These reports, along with reconciliations on non-GAAP measures to GAAP are available on the Investor Center of www.dupont.com under Key Financials & Filings.
Forward Looking Statements During the course of this presentation we may make forward-looking statements or provide forward-looking information. All statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as “plans,” “expects,” “will,” “anticipates,” "believes," “intends,” and “estimates.” Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties, and assumptions. Some of those risk factors include: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; global economic and capital markets conditions; litigation and environmental matters; changes in laws and regulations or political conditions; business or supply disruptions; inability to protect and enforce the company’s intellectual property rights and successful integration of acquired business and divestitures of underperforming or non-strategic assets. The company does not undertake to update any forward-looking statements as a result of future developments or new information.
Developing Markets Total developing markets is comprised of Developing Asia, Developing Europe, Middle East & Africa, and Latin America. A detailed list of all developing countries is available on the Earnings News Release link on the Investor Center website at www.dupont.com.
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Clear Strategy, Stronger Company… … Superior Return to Shareholders
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Three Strategic Priorities To Increase The Value Of DuPont…
Increasing The Value Of DuPont
Ag & Nutrition 1. Extend our
leadership across the high-value, science- driven segments of the Ag and Food value chain
Bio-based Industrials
2. Develop world-
leading industrial biotechnology capabilities to create transformational new bio-based businesses
Advanced Materials
3. Strengthen and
grow our leading position in differentiated high-value materials and leverage new sciences
Higher Growth, Higher Value Company By Building And Leveraging Three World-Leading Positions
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…In Conjunction With Three Operational Priorities
Our efforts to accelerate growth, improve margins and increase return to shareholders are ongoing and we are committed to
delivering superior value creation to shareholders
Increasing Return on R&D Driving Penetration In Fast-Growing, Developing Markets
• Delivering Ongoing Productivity
• Optimizing resource allocation
• Returning cash to shareholders
Innovation Global Reach Execution
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Stronger Positions in Secular Growth Markets
Agriculture Food Biosciences
Automotive Mobile Devices, Displays
Solar/Energy Protection
Well Positioned in Growth Markets
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Increased CapEx And R&D For Higher Growth Businesses
73%
84%
20%
13%
7%
3%
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
2007 2012
Cap
Ex A
nd
R&
D S
pe
nd
Pro
file
($
B)*
Core Segments Performance Chemicals Performance Coatings
* Excludes corporate CapEx and restated to include allocation of corporate R&D spend to segments
(1) Core Segments include Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Materials, and Safety & Protection
(1)
Positioning DuPont For Greater Growth Through Increased Investment And Differential Capital Deployment
+33% Total
Increase
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Ongoing Portfolio Enhancement Through Major M&A…
2012 Segment Sales Performance
Coatings
Agriculture
Industrial Biosciences
Safety & Protection
Performance Materials
Performance Chemicals
Nutrition & Health
Electronics & Communications
Positioning DuPont For Future Growth – Higher Growth And Margins With Reduced Cyclicality And Commoditization
* Consolidated net sales from continuing operations.
$34.8B*
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DuPont Has Implemented Aggressive Cost Cutting And Working Capital Improvements
Cost Reductions Working Capital Savings
Since 12/31/08:
Announced Cost Reductions
Cost Reductions Achieved
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2009 2010 2011 2012
>$2.6B Cumulative Working Capital Savings (2009 - 2012)
11.8%
10.5%10.0% 10.2%
9.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2009 2010 2011 2012 1H 2013
SG&
A %
of
Re
ven
ue
$2.0B
>$2.2B
Savings Actions Funded Growth Investments And Offset Inflation
• Days Payable Outstanding (DPO) increased by 11%
• Days Sales Outstanding (DSO) decreased by 12%
• Inventory Days Supply (IDS) remained flat: Performance Chemicals ; Remaining Businesses
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10 * Excludes non-operating pension/OPEB costs and significant items
Significant Improvement in Segment Operating Margins
Operating Margin* 2008 – 2012 Improvement (BPS) Segments 2008 2012
Agriculture 15.4% 20.5% 507
Electronics & Communications 11.3% 9.6% (171)
Industrial Biosciences - 13.7% -
Nutrition & Health 2.5% 9.3% 683
Performance Chemicals 10.9% 25.2% 1,430
Performance Materials 6.3% 19.0% 1,271
Safety & Protection 18.7% 16.2% (249)
Total 10.9% 17.6% 664
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$1.5
$3.5 $0.7
$0.1
$2.2
$3.6
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012
Net
Inco
me
($
B)
Net Income (less Pharma) Pharma Net Income
Strong Performance Despite Pharma License Expiration
(1) Income from continuing operations after income taxes, excluding significant items and non-operating pension/OPEB costs (2) Pharma Net Income assumes a tax rate of 35%
2008 2012
DuPont Has Greatly Exceeded Pharma’s Contribution In Less Than Four Years
(2) (1)
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DuPont TSR & CAPITAL RETURNED Significantly Outperformed Peers And The Broader Market
Total Shareholder Return (12/31/08 – 9/13/13)(1)
Source: Datastream as of 8/19/2013, Bloomberg, Capital IQ, FactSet (1) Proxy Peers and S&P Indices are USD market cap-weighted and assume dividends are re-invested at the closing price applicable on the ex-dividend date (2) Proxy Peers consists of 3M, Air Products, Baxter Intl, Boeing, Caterpillar, Dow, Emerson, Honeywell, Ingersoll Rand, Johnson Controls, Johnson and Johnson, Kimberly Clark, Merck,
Monsanto, Proctor and Gamble, Syngenta AG, and United Technologies (3) S&P Chemicals in 2012 consists of Airgas, Air Products, CF Industries, Dow, DuPont, Eastman Chemical, Ecolab, FMC, IFF, LyondellBasell, Monsanto, Mosaic, PPG, Praxair, Sherwin-
Williams, and Sigma-Aldrich (4) Calculated as the average of annual dividends + common stock repurchases / average daily market cap in each of the four years (2009 – 2012)
4.9%
4.5%
3.7%
4.2%
DuPont
Proxy Peers
S&PChemicals
S&P 500
Total Capital Returned to Shareholders (2009 – 2012)(4)
182%
95%
156%
107%
DuPont
Proxy Peers
S&PChemicals
S&P 500
(2)
(3)
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Building A Higher Growth, Higher Value Company
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DuPont’s Broad Science And Innovation Capabilities Create A Large And Accelerating Growth Opportunity
Materials Science
Chemistry
Biological Sciences
World Class Integrated Science Coupled With…
Engineering
Catalysis
Precision Patterning
Fiber Science &
Engineering
Fluoro Chemical &
Polymer Synthesis
Polymer Synthesis
Surface & Colloidal Science
Film Fabrication
Inorganic / Organic
Synthesis
Rheology Control
Inorganic- Organic
Composites
Polymer Processing
Biochemistry
Fermentation Engineering
Formulation Science
Nanoscience
Metabolic Engineering
Nutrition Science
Molecular Biology
Chemical Engineering
Agronomy
Plant Physiology/
Disease
Microbiology
Conventional Breeding
Gene Recombination
& Regulation
Cell / Tissue Culture
Protein Engineering
Molecular Breeding
Genomics
Bio- informatics
Entomology
Plant Genetics
Particle & Dispersion
Science
…Compelling Market Insights To Solve World Scale Challenges
DuPont Is On The Forefront Of Another Transformational Wave Of Innovation
Integration of emerging
biological sciences
Energy
Protection
Food
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DuPont Leverages Capabilities Across Its Technology Platform To Drive Innovation And Growth
Product: Plenish®
Function: Healthier, high-oleic soybeans
Status: In Launch
Product: Rynaxypyr®
Function: Breakthrough insect control, excellent environmental profile
Status: 2012 Sales: ~$750MM
Product: Solamet®
Function: Boosts solar panel output
Status: 2012 Sales: >$800MM
Product: Zytel® RS / Hytrel® RS
Function: Renewably sourced lightweight materials for automobiles and electronics
Status: Launched
Product: Cellulosic Ethanol
Function: Non-food sourced biofuels technology
Status: Scale-up
Product: Bio-PDO™ Enterprise
Function: Renewably sourced polymer
Status: 2012 Sales: ~$300MM
Current Product Examples of DuPont “Integrated Science” At Work
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DuPont Has A Strong and Balanced Pipeline
*Circle size indicates estimated peak year revenue
Discovery Development Launch
Corn:
Intrasect®
Plenish® Canola
Cyazypyr®
Seed
Treatment
Cellulosic
Ethanol Food
Protection
Probiotics
Corn: New
MOA
Insect Control
Bio-THF
Bio-Isoprene
Biobutanol
AcreMax® PV:
Front side
silver paste
Opteon®
YF
Next Gen
Fluoropolymers
PV:
Ionomer
Encapsulant
OLED
Silicon
Ink
Zytel®
Next Gen
Nylons
Kevlar®
Tire
Innovation
Kevlar®
AP
Automotive
TPC
Agriculture and Nutrition
Bio-based Industrials
Advanced Materials
Personal
Care
Enzymes
Cold H2O
Enzymes
$100MM- 500MM $0-
100MM
$500MM+
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$6.6
$11.1
$0.0
$3.0
$6.0
$9.0
$12.0
2008 2012
Sale
s ($
B)
Developing Market Sales as % of Total DuPont
25%
32%
Rapidly Growing Developing Markets Sales Danisco Case Study
DuPont’s Global Infrastructure Broadens Sales Reach And Improves Margins
• Prior to its acquisition by DuPont, Danisco accessed developing markets via distributors with a negative impact on margins
• Today, Danisco leverages DuPont’s extensive global direct channel sales infrastructure, leading to:
• Broader geographic distribution
• Significantly enhanced margins
• Danisco’s sales growth trend** over last two years:
• Developing markets: +14%
• China: +22%
Drive Greater Penetration Into Fast-Growing Developing Markets
*
* Net sales from continuing operations ** Growth trend based upon monthly sales since June 2011
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Dividends Will Continue To Be A Priority…
$1.64 $1.64 $1.64
$1.70
$1.78
2009 2010 2011 2012 2013E
* 2013 estimate is based on the assumption that the board of directors will declare dividends for the fourth quarter in the same amount that will be paid in the third quarter
• Continuous dividend since 1904
• No reduction in dividend during recession or post Pharma license expiration
• Dividend growth restarted
• Dividend yield and payout ratio are above peers
*
Dividends per Share Stability and Growth Focus
Grow Future Dividends In Line With Earnings
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…To Be Complemented With Share Buybacks
We Will Continue To Repurchase Shares In Line With Our Balance Sheet Objectives And Strategic Opportunities
(1)
(1) Common dividends paid to shareholders
$1B
$3B
$5B
$7B
$9B
$0B
$2B
$4B
$6B
$8B
$10B
2009 2010 2011 2012 1H2013
Cu
mu
lati
ve C
apit
al R
etu
rned
To
Sh
areh
old
ers
($B
)
Cumulative Dividends Cumulative Buybacks
• Capital returned to shareholders has accelerated:
• Two recent dividend increases
• $1B share repurchase with Performance Coatings proceeds
Comments Capital Returned To Shareholders
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Sales CAGR 7% Operating EPS CAGR 12%
Operational Priorities Strategic Priorities
What You Can Expect
Extend Ag & Nutrition Leadership
Strengthen Advanced Materials
Build Bio-based Businesses
Innovation
Execution
Global Reach
Long Term Growth Targets
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Copyright © 2013 DuPont. All rights reserved. The DuPont Oval Logo, DuPontTM The miracles of scienceTM, and all products denoted with ® or TM are trademarks or registered trademarks of E. I. du Pont de Nemours and Company.
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