E.I. du Pont de Nemours and Company | Record Profits in the Mid-1990s
Record Profits in the Mid-1990s
After several years of declining profits (from $2.5 billion in 1989 to $0.6 billion in 1993), DuPont reaped the rewards from the restructuring years. The company reported a streak of record profits in the mid-1990s, beginning in 1994 with a net income of $2.7 billion and continuing through 1996 with a net income of $3.6 billion. The company's stock price enjoyed a corresponding rise: from a low around $15 a share in 1990 to a high of almost $50 in 1996.
Some of these earnings were used in 1995 to buy back the shares owned by Seagram since 1980. To raise money for a venture into showbusiness, Seagram sold its 24 percent stake in DuPont back to the company for $8.8 billion, a discount of 13 percent from the market value of the stock at the time.
Conoco played an important role in the rejuvenation of DuPont. In 1995 some analysts (and DuPont shareholders) were recommending DuPont sell off the subsidiary, which they felt was not even returning the cost of its capital. After scrutinizing the numbers, the DuPont management team decided to hold on to Conoco but reevaluate its decision in a year. In 1996 Conoco returned $860 million in net earnings and bought the support of DuPont's board. In 1997 Conoco acquired heavy oil reserves in Venezuela and a gas field in Texas, thus increasing its oil reserves by 50 percent.
Joint ventures continued to be an important strategy for DuPont in the mid- to late 1990s. From 12 joint ventures in 1990, DuPont had reached 37 by 1997. Among the most significant were its partnership with the Japanese chemical firm Asahi to market synthetic fibers in Asia, the 50–50 venture with Dow called DuPont Dow Elastomers, and the alliance with Pioneer Hi-Bred International to form Optimum Quality Grains.
DuPont reaffirmed its commitment to the life sciences as a core business in the late 1990s. Bioindustrial, pharmaceutical, and feed and food industries were seen as the new ground for the increasing integration of chemistry and biotechnology. As part of this push, in 1997 DuPont purchased Protein Technologies International, which developed soy-based products, from Ralston Purina for $1.5 billion. The following year the company agreed to buy Merck's 50 percent share in the joint venture DuPont Merck Pharmaceutical Company.