DuPont To Take Broad Action To Offset Global Energy Impact
September 12, 2005 — Citing a recent company review of the global energy outlook, DuPont today announced its intention to raise prices for all products in light of rapidly increasing costs for energy and feedstocks.
DuPont Corporate Economist Robert H. Shrouds released a report today indicating that record-high energy prices, which have been further exacerbated by Hurricane Katrina, will be a factor in the global energy outlook for the foreseeable future.
“Prices of crude oil, natural gas, and refined petroleum products have risen to record levels and are expected to remain elevated. Even when adjusted for inflation, crude oil prices are higher than at any time except the 1979-82 period, and natural gas prices are at record highs,” Shrouds said.
“We are facing the unfortunate reality that the world has truly changed and energy prices are not receding, nor do we see signs of lower energy costs in the near future,” said DuPont Chief Marketing and Sales Officer Diane H. Gulyas. “This supply shock has affected all of our operations and requires a comprehensive strategy that includes this price initiative coupled with our ongoing productivity improvements and energy conservation efforts.”
According to the DuPont report, crude oil prices for 2006 are expected to be above 2005’s average price of $59/bbl which is a 44 percent increase over the already record high $41/bbl for 2004. U.S. natural gas prices have doubled in less than 12 months prior to the hurricane and post-Katrina, have almost tripled. Natural gas prices moved above $12/mmbtu in August, and are expected to average $8/mmbtu for all of 2005, 33 percent higher than the previous record $6/mmbtu average price for 2004.
A $10 increase in the price of a barrel of oil increases variable costs to the U.S. chemical industry by about $2.6 billion per year, while a $1 increase per million BTU in natural gas prices increases variable costs to the U.S. chemical industry by $3.7 billion per year.
DuPont is in the process of communicating with customers regarding its pricing plans.
DuPont is a science company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture, nutrition, electronics, communications, safety and protection, home and construction, transportation and apparel.
Forward-Looking Statements: This news release contains forward-looking statements based on management’s current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company’s strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like “expects,” “anticipates,” “plans,” “intends,” “projects,” “indicates,” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in DuPont’s filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions of countries in which the company does business; competitive pressures; successful integration of structural changes, including acquisitions, divestitures and alliances; research and development of new products, including regulatory approval and market acceptance, and seasonality of sales of agricultural products.
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