DuPont 2009 Annual Report Download - page 32

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
Segment Sales PTOI
(Dollars in billions) (Dollars in millions)
2009 $3.4 $ 69
2008 $4.4 $ (8)
2007 $4.3 $366
Performance Coatings is one of the world’s leading motor vehicle coatings suppliers. Products offered include high
performance liquid and powder coatings for motor vehicle original equipment manufacturers (OEMs), the motor
vehicle after-market, and general industrial applications, such as coatings for heavy equipment, pipes and appliances
and electrical insulation. The company markets its after-market coatings products using the DuPont Standox, Spies
Hecker and Nason brand names. Standox and Spies Hecker are focused on the high-end motor vehicle after-
markets, while Nason is primarily focused on economy coating applications.
In 2009 and 2008, the segment experienced a significant decline in sales, mainly to the OEMs markets, due to the
impact of the global economic recession in the automotive industry. In addition, the North American automotive
industry continued to experience structural changes, including the loss of U.S. market share by U.S. automakers. In
2009 the global production of automobiles and light trucks declined by 14 percent reflecting declines of 33 percent in
North America, and 10 percent in the rest of the world, which was partially offset by an increase in production of
44 percent in Greater China. The industry production forecast for 2010 projects a global increase of about 9 percent,
with increased production in all regions.
2009 versus 2008 Sales of $3.4 billion were down 21 percent when compared to prior year, reflecting a 20 percent
decline in volume and 1 percent lower USD selling prices. The decline in volume reflects the impact of fewer motor
vehicle and industrial truck builds of motor vehicle OEMs, and lower sales of industrial and after-market products in all
regions. Sales to OEMs improved substantially during the second half of 2009, mostly due to the impact of government
incentives programs and higher sales in Asia Pacific. Sales of after-market and industrial coatings have experienced a
slower recovery from the inventory destocking experienced in the industry during fourth quarter of 2008 and first
quarter of 2009. The lower USD selling prices reflect unfavorable currency impacts, partially offset by higher local
selling prices.
PTOI was $69 million as compared to a loss of $8 million in 2008. The improvement in PTOI is primarily due to lower
fixed costs, and the net year-over-year impact of the 2008 and 2009 restructuring activities, partially offset by the effect
of lower volumes.
2008 versus 2007 Sales of $4.4 billion were essentially flat when compared to 2007, reflecting 7 percent higher USD
selling prices, offset by a 7 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, partially offset by
higher sales of after-market and industrial coatings products and strong sales in emerging markets.
Pre-tax loss of $8 million compared to income of $366 million in 2007. Year-over-year decline in PTOI reflects the impact
of the 2008 restructuring charge, as well as the impact of higher raw material costs and lower volumes, partially offset
by higher prices.
Outlook For 2010, the segment expects sales increases that will exceed the OEMs build growth due to expected
recovery of OEMs and light truck markets and positive currency impacts. PTOI is also expected to increase significantly
due to fixed costs reductions, benefits from the company’s 2008 and 2009 restructuring programs and the impact of
higher sales.
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PERFORMANCE COATINGS