DuPont 2010 Annual Report Download - page 31

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
refrigerant. Higher USD selling prices reflect favorable pricing for titanium dioxide and pass-through of higher raw
material costs for industrial chemicals and fluoroproducts.
PTOI was $1,081 million as compared to $547 million in the prior year. The increase in PTOI was driven by higher
volume, higher USD selling prices that more than offset increases in raw material costs, improved productivity and the
absence of a net $54 million restructuring charge in the prior year.
2009 versus 2008 Sales of $5.0 billion were 18 percent lower than 2008, due to a 12 percent decline in volume and
6 percent lower USD selling prices. The lower volume principally reflects decreased demand for industrial chemicals
and fluoroproducts across all regions reflecting the impact of the economic downturn. Sales of titanium dioxide
products recovered during the second half 2009, and were higher than the pre-recession levels in the second half 2007.
The lower USD selling prices were mainly due to contractual pass-through of lower raw material prices and unfavorable
currency impact in Europe and Asia Pacific.
PTOI was $547 million as compared to $687 million in 2008. The decrease in earnings was primarily due to the impact
of lower volume, partially offset by fixed costs reductions.
Outlook Performance Chemicals’ sales are expected to increase in 2011 as a result of the continued global economic
recovery, higher global demand for titanium dioxide and specialty chemicals, and higher USD selling prices. Total
segment earnings are also expected to increase consistent with the higher sales volume, higher USD selling prices and
improved fixed cost productivity. This segment manufactures products that could be affected by uncertainties
associated with PFOA matters. See the discussion on page 46 under the subheading PFOA for further information.
Segment Sales PTOI
(Dollars in billions) (Dollars in millions)
2010 $3.8 $249
2009 $3.4 $ 69
2008 $4.4 $ (8)
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. After-market coatings products are marketed 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 in 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.
In 2010, the segment experienced strong recovery from the economic downturn across most markets and regions.
Global automotive markets experienced increased production levels due to improved OEM auto builds as a result of
higher demand, most significant in North America and Europe. Automotive builds across the globe increased
22 percent, reflecting an improvement of 37 percent in North America and 20 percent in the rest of the world. The
industry production forecast for 2011 projects a global increase of 5 percent, reflecting continued recovery in North
America and continued growth in Asia Pacific.
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PERFORMANCE COATINGS