DuPont 2009 Annual Report Download - page 33

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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 $4.8 $287
2008 $6.4 $128
2007 $6.6 $626
Performance Materials’ businesses provide productive, higher performance polymers, elastomers, films, parts, and
systems and solutions which improve the uniqueness, functionality and profitability of its customers’ offerings. The key
markets served by the segment include the automotive OEM and associated after-market industries, as well as
electrical, electronics, packaging, construction, oil, photovoltaics, aerospace, chemical processing and consumer
durable goods. The following are Performance Materials’ operating businesses:
Performance Polymers delivers a broad range of polymer-based high performance materials in its product portfolio,
including elastomers and thermoplastic and thermoset engineering polymers which are used by customers to fabricate
components for mechanical, chemical and electrical systems. The main products include: DuPontZytelnylon
resins, Delrinacetal resins, Hytrelpolyester thermoplastic elastomer resins, Tynexfilaments, Vespelparts and
shapes, Vamacethylene acrylic elastomer, Kalrezperfluoroelastomer and Vitonfluoroelastomers. Performance
Polymers also includes the DuPont Teijin Films joint venture, whose primary products are Mylarand Melinex
polyester films.
Packaging & Industrial Polymers specializes in resins and films used in packaging and industrial polymer applications,
sealants and adhesives, sporting goods, and interlayers for laminated safety glass. Key brands include: DuPont
Surlynionomer resins, Bynelcoextrudable adhesive resins, ElvaxEVA resins, SentryGlasand Butacitelaminate
interlayers.
2009 versus 2008 Sales of $4.8 billion were 26 percent lower reflecting 18 percent lower volumes, 6 percent
decrease in USD selling prices, and a 2 percent reduction related to portfolio changes. The decrease in volume mainly
reflects the effect of the global economic recession and the inventory destocking experienced during the first part of the
2009. However, sales continuously improved during the second half of 2009, both sequentially and when compared to
2008, mainly due to overall economic recovery and higher sales to the motor vehicle industry. The lower USD selling
prices were a combination of significantly weaker product sales mix, unfavorable currency impacts, and for certain
products, lower selling prices in response to lower feedstock costs.
2009 PTOI was $287 million compared to $128 million in 2008. The improvement in PTOI reflects the impact of lower
raw material, energy and freight costs, lower fixed costs, the absence of a $216 million hurricane-related charge in
2008, a $26 million benefit in 2009 related to a reduction in the hurricane-related reserve, proceeds from hurricane-
related insurance recoveries of $56 million received in 2009, and the net year-over-year impact of the 2008 and 2009
restructuring activities. The company is aggressively pursuing additional insurance recoveries in the range of $50 –
$100 million.
2008 versus 2007 Sales of $6.4 billion were 3 percent lower, reflecting a 13 percent decrease in volume and a
1 percent reduction from portfolio changes, which more than offset 11 percent higher USD selling prices. Sales volume
declines were more pronounced beginning late in the third quarter, with continued and accelerated deterioration
through the fourth quarter, and occurred in all major regions and end-use market segments. The decline reflected a
broad industry movement to reduce inventory and improve cash positions to manage through weak global economic
demand. Volumes were also negatively impacted by extended operating unit shutdowns related to the time taken to
implement facility repairs stemming from damages associated with Hurricanes Gustav and Ike. Operating units
outages associated with the hurricanes were of varying lengths depending on the level of damage incurred and the
ability to obtain utilities and ingredients to enable a restart.
32
PERFORMANCE MATERIALS