DuPont 2008 Annual Report Download - page 30

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Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, continued
2007 PTOI was $894 million versus $604 million in 2006. 2006 PTOI included a $122 million restructuring charge. In
addition, 2007 PTOI benefited from sales volume and price gains, partially offset by higher production costs across
most of the segment and the growth investment in the seed business.
Outlook In 2009, the segment anticipates continued growth through increased Pioneer corn value offerings,
including stacked traits and seed treatments in the U.S. and Canada. Pioneer will continue to build on its North
American product offerings with the addition of 26 new soybean varieties and 96 new Pioneer»brand corn hybrids.
Pioneer anticipates price increases from higher value product mix and continued market share gains in key soybean
and corn markets including the U.S., Canada and Brazil. The segment’s introduction of new crop protection products
is projected to drive volume gains, particularly in Europe and Latin America. Higher production and raw material
costs and negative currency impacts will be moderating factors in the underlying results.
COATINGS & COLOR TECHNOLOGIES
Segment Sales
(Dollars in billions)
PTOI
(Dollars in millions)
2008 $6.6 $326
2007 $6.6 $840
2006 $6.3 $817
Coatings & Color Technologies is one of the world’s leading motor vehicle coatings suppliers and the world’s largest
manufacturer of titanium dioxide products. Products offered include high performance liquid and powder coatings for
motor vehicle original equipment manufacturers (OEMs), the motor vehicle 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 motor vehicle 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 to an established, growing business,
shipping product globally. In 2008, construction was completed and operations began at 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 for most of the year, with
growth in the emerging regions, offset by significant decline in demand across the segment during the last four
months of 2008 as the industry supply chains destocked worldwide in response to the global economic recession.
Global demand for titanium dioxide products was down in 2008 with global market volumes down 5 percent from
2007. Sales for refinish products increased in all regions, except the U.S. The OEM market realized growth in Latin
America and Asia Pacific, however this was more than offset by significant declines in Europe, U.S., and Canada as a
result of lower builds of automobiles and light trucks in 2008. Industrial coatings sales increased in most regions
outside the U.S. and Canada, with larger increases in Asia Pacific and Latin America.
In December 2008, as part of the company’s restructuring plan, the segment recorded a charge of $236 million that
included costs for employee separations and asset related charges and will cover the elimination of approximately
1,600 positions and the closure of certain manufacturing units. The plan is expected to be completed in 2010 and will
result in cost savings of approximately $50 million in 2009, with an annual savings rate of approximately $140 million.
2008 versus 2007 Sales of $6.6 billion were flat when compared to 2007, reflecting 8 percent higher USD selling
prices, offset by an 8 percent volume decline. The higher USD selling prices primarily reflect favorable currency
impacts in Europe and Latin America and pricing actions to offset the increases of raw materials costs. The decrease
in volume was primarily due to lower sales of products sold to OEMs in North America and Europe and lower demand
for titanium dioxide, partially offset by strong sales in emerging markets.
28
Part II