DuPont reported a wider second-quarter loss on Thursday and wrote down the value of its automotive business by $2.5 billion as the industrial materials giant struggles with a prolonged weakness in one of its biggest end-markets.
DuPont, which makes materials used in products ranging from engine covers to brake fluid, is heavily exposed to the auto industry, which has been among the hardest hit after the coronavirus lockdowns emptied roads and shuttered car showrooms.
The company booked the impairment charge under its Transportation & Industrial segment, saying the business was now worth less because of continued weakness in global automotive production.
Even before the outbreak, DuPont had been grappling with lower sales in the unit, particularly due to lower prices for nylon, a stiff plastic used in making auto parts and industrial equipment.
The company said transportation unit earnings before interest, taxes and other expenses fell 86 percent to $49 million while total revenue fell 34 percent to $832 million.
But DuPont's CEO said the company is starting to see a rebound in the auto sector with orders picking up in mid-July, and expected 2021 to be a "decent" year for that business.
CEO Ed Breen said DuPont had likely seen the worst in the second quarter even as a second wave of virus cases remains a threat, but the recovery would be measured and uneven.
"In markets like automotive and residential construction, we have seen an inflection in demand heading into the third quarter, but believe recovery will be gradual," Breen said on a post-earnings call.
The company's overall net loss available to shareholders, which included the hefty charge, was $2.48 billion, or $3.37 per share, in the three months ended June 30 compared to a loss of $571 million, or 76 cents per share, a year earlier.
The Wilmington, Del.-based company, once part of the conglomerate DowDuPont that was split up last year, reported a 12 percent fall in sales to $4.8 billion.
Expecting a modest revival in automotive and residential construction industries, DuPont projected adjusted earnings between 71 and 73 cents for the current quarter, marginally above the 71 cents estimated by analysts according to Refinitiv IBES data.
Automotive News contributed to this report.