DuPont 2007 Annual Report Download - page 31

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Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, continued
COATINGS & COLOR TECHNOLOGIES
Segment Sales
(Dollars in billions)
PTOI
(Dollars in millions)
2007 $6.6 $840
2006 $6.3 $817
2005 $6.1 $536
Coatings & Color Technologies is one of the world’s leading automotive coatings suppliers and the world’s largest
manufacturer of titanium dioxide white pigments. Products offered include high performance liquid and powder
coatings for automotive OEMs, the automotive aftermarket and general industrial applications, such as coatings for
heavy equipment, pipes and appliances and electrical insulation. The company markets its refinish products using
the DuPont
TM
, Standox», Spies Hecker»and Nason»brand names. Standox»and Spies Hecker»are focused on the
high-end automotive aftermarkets, while Nason»is primarily focused on economy coating applications. The
segment’s broad line of DuPont
TM
Ti-Pure»titanium dioxide products, in both slurry and powder form, serve the
coatings, plastic and paper industries.
The segment’s titanium tetrachloride business has moved from a startup business to an established, growing
venture, shipping product globally. By mid-2008, the business plans to complete construction and begin operation of
a $30 million titanium tetrachloride facility at its titanium dioxide plant in Tennessee.
The key markets in which Coatings & Color Technologies operates continued to grow in 2007, with more significant
growth in Europe and Asia Pacific. Global demand for titanium dioxide white pigment was strong in 2007 with global
market volumes up about 5 percent from 2006.
Sales for refinish products increased in all regions. The OEM market realized growth in Latin America and Asia
Pacific, partially offsetting declines in the U.S. and Canada. This reflects the lower 2007 North American builds of
automobiles and light trucks. Powder coatings sales increased in all regions, more significantly in Asia Pacific,
U.S. and Europe. Worldwide sales in electrical insulation and metal coatings markets continued to improve.
2007 versus 2006 Sales of $6.6 billion were up 5 percent, reflecting about 4 percent higher USD selling prices for
the segment, as well as a 1 percent increase in volume. USD selling prices were higher across a majority of the
segment’s products. The increase in volume was primarily attributable to the sales of titanium dioxide, particularly in
Europe and Asia Pacific. This increase was partially offset by declines in volume for products sold to automotive
OEM producers, primarily in North America and Europe. Volumes for sales of refinish products were relatively flat as
compared to 2006.
PTOI in 2007 of $840 million increased from $817 million in 2006. The PTOI improvement was primarily the result of
higher revenue driven by higher USD selling prices and benefits realized from the 2006 restructuring program,
partially offset by higher raw material and transportation costs. PTOI in 2006 included a net charge of $132 million for
restructuring and $30 million primarily for accelerated depreciation related to the transformation plan that was
initiated in the first quarter 2006 (see Note 4 to the Consolidated Financial Statements). These charges were
partially offset by $142 million in insurance proceeds, primarily related to the hurricane damages incurred in 2005.
2006 versus 2005 Sales of $6.3 billion were up 4 percent, reflecting about 2 percent higher USD selling prices for
the segment. An additional 2 percent increase from volume was primarily realized in the pigments business,
reflecting strong global demand as well as the first quarter startup of the DeLisle, Mississippi plant following
Hurricane Katrina. Higher selling prices reflected concerted efforts within the segment to increase prices for the
majority of its products as part of its efforts to offset the impact of higher raw material costs and the impact of lower
global OEM automotive volumes.
PTOI in 2006 of $817 million increased from $536 million in 2005. Lower fixed costs in both years and higher volumes
in pigments contributed to the improved 2006 earnings. PTOI in 2006 included a net charge of $132 million for
restructuring and $30 million primarily for accelerated depreciation. 2006 PTOI also included $142 million in
insurance proceeds, primarily related to the hurricane damages suffered in 2005. 2005 PTOI included charges of
29
Part II