By Rithika Krishna
(Reuters) -Industrial materials maker DuPont de Nemours said it expects slower sales volume growth and sequential margin contraction in the current quarter as COVID-related shutdowns in China further pressured an already tight supply chain.
Chief Financial Officer Lori Koch said in a call the company missed about $20 million worth of sales in the current quarter as a result of China-related lockdowns.
“We had some key raw materials within our electronics business that we source from China that we weren’t able to get full supply, so we ran some of our domestic plants at lower unit rates,” Koch said.
The company, once part of the erstwhile chemical giant DowDuPont, last quarter hiked prices by 6% to offset rising costs for raw materials and energy due to global supply chain challenges intensified by Russia’s invasion of Ukraine.
DuPont, which in February agreed to sell most of its mobility and materials business to Celanese, said it would execute the previously approved $1 billion repurchase program a quarter sooner and look at a larger repurchase program.
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Shares of the company reversed course to rise 1.68% to $67 on the news, after falling about 5% in premarket trading.
“The company is emphasizing the shift in tone in favor of aggressive share buybacks instead of acquisitions. This is something we believe investors would like to hear given skepticism around M&A,” analyst Aleksey Yefremov from KeyBanc Capital Markets said.
DuPont said it expects 2022 net sales for continuing operations to between $13.3 billion and $13.7 billion and adjusted earnings between $3.2 and $3.5 per share.
Prior to the divestiture, the company had set the annual sales guidance at $17.4 billion and $17.8 billion.
It’s annual core earnings guidance of $3.25 billion to $3.45 billion also includes a $35 million headwind related to suspending operations in Russia.
(Reporting by Rithika Krishna in Bengaluru; Editing by Shinjini Ganguli)