Zacks_Analysts' Blog : DuPont & Suntech Join Forces - Analyst Blog

E.I. du Pont de Nemours and Company (DD) and Suntech Power Holdings entered into a strategic agreement with an overall goal of augmenting the supply of PV materials and technologies in the global solar energy market.

The agreement specifically focuses on technology advancements, supply chain optimization, cost reduction initiatives as well as DuPont’s Tedlar polyvinyl fluoride film supply.

Further, DuPont and Suntech are engaged in co-marketing opportunities in order to further promote a faster and broader use of solar energy, and its adoption worldwide.

The companies have worked together in the past with DuPont providing its Solamet PV metallization pastes for Suntech’s solar cells and DuPont’s Tedlar polyvinyl fluoride film for protective backsheets on Suntech’s solar modules.

On January 24, 2012, DuPont reported earnings of 35 cents per share in the fourth quarter of 2011 compared with 50 cents in the year-ago quarter. The profit exceeded the Zacks Consensus Estimate of 33 cents per share.

Sales in the quarter grew 14% to $8.4 billion due to 14% increase in prices. Further, the agriculture segment also contributed significantly to the sales increase. The quarter witnessed declining sales volumes due to destocking in photovoltaics, polymer and industrial supply chains. The consumer electronics and construction division also faced soft demand.

Despite soft demand for consumer electronics segment and weak markets for housing and construction, DuPont delivered exceptional results for full-year 2011. We believe that the slowdown in global economic growth could reduce the company’s capital spending, thereby adversely affecting its operating performance.

However, markets for DuPont's agriculture and food businesses continue to be strong, especially with a strong planting season in Latin America.

The company faces stiff competition from The Dow Chemical Company (DOW) and BASF SE (BASFY).

In view of the above stated reasons, the company retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. Currently, we hold a long-term (more than 6 months) Neutral recommendation.