DuPont CEO Move: Beware Bad Global Chemistry

DuPont (DD.N) Chief Executive Officer Ellen Kullman is stepping down this month and will be replaced temporarily by board member and veteran USA executive Edward Breen, who oversaw the break-up of conglomerate Tyco worldwide Plc (TYC.N). Kullman said the company has a strong foundation, and the new leader can capitalize fully on its opportunities ahead. “I want to express my honest thanks and admiration of all my DuPont colleagues around the world”.

CEOs usually loathe to breakup the companies over which they preside, and it’s not like DuPont has completely eschewed the shrink-to-grow strategy that’s now in fashion.

A Ms. Kullman-led DuPont in May dealt a landmark blow to one of the most influential activist investors, defeating a campaign by shareholder Nelson Peltz and his Trian Fund Management L.P., which was seeking spots on the company’s board. She worked her way up to president in October 2008 and became CEO in January 2009.

“We invested in GE because it is undervalued and underappreciated by the market despite what we believe is a transformation that will allow its world-class industrial businesses to drive attractive shareowner returns”, Peltz said in a statement.

The market has been unhappy with DuPont’s performance and its reluctance to follow Peltz’s prescription for a few time now.

“The company again slashed its projection for operating profit for the year to $2.75 a share, down from its prior projection of $3.10 a share, which had already been cut in July”.

Dupont CFO Nick Fanandakis said, “As macro conditions have deteriorated further, we are intensifying our effort to offset these pressures with further productivity improvements and cost savings, while making disciplined and targeted investments in innovation to increase value for shareholders over the long term”. A replay of the conference call webcast will be available for 90 days by calling 1-630-652-3042, Passcode 6030934#. For additional information see the investor center at http://www.dupont.com.

Even if Breen isn’t appointed full-time CEO, whomever the board picks is going to have a mandate to make dramatic changes.