DuPont’s stock rises as it shuts factories in global contraction; banks lose value; Morgan out at SAP

DuPont stock rose as much as 4% in Monday trading after chief executive Edward Breen said he was temporarily shutting down some plants and getting ready to borrow more money to help the Wilmington-based specialty materials maker cope with the global sales drop from the coronavirus pandemic.

The stock briefly traded above $40 before closing at $39.72, up $1.36 or 3.55%. DuPont traded above $60 as recently as January but fell below $30 in the initial fear over coronavirus shutdowns last month.

As the pandemic continues to spread, the company is having a tough time predicting sales, Breen said in a statement.

Here’s what he said the company has done:

- Replaced its $750 million line of credit with a new, $1 billion line and a $2 billion “delayed-draw facility” that he said will help ensure it can pay bonds due this November. That’s when DuPont also plans to combine its largest business group, which makes food and medicine additives, with International Flavors and Fragrances into a new company part-owned by DuPont.

- Delayed “certain capital investments” and stopped production at “several manufacturing sites,” mostly in its Transportation and Industrial business, which supplies the slumping auto industry, among other customers.

DuPont officials wouldn’t confirm which plants are closing down, or for how long, saying only that the closings would be temporary.

DuPont has been updating facilities at its 40-building Experimental Station near its suburban Wilmington headquarters, and had been expanding its factories in China.

U.S. meat packers, aerospace manufacturers, and other sectors have shut down plants and reopened with stricter safety guidelines since states imposed coronavirus safety rules last month.

Boeing’s helicopter factory in Ridley Park and its airliner factories in Washington state and South Carolina shut for “deep cleaning” in late March, but the Ridley Park works, which makes Chinook and Osprey aircraft for U.S. and foreign militaries, reopened Monday.

DuPont also said it expects to post larger than previously expected losses for the first quarter of the year on May 5, and declined to predict future sales or profits.

Partly offsetting the drop in industrial demand, DuPont also noted “strong demand for its materials in the personal protection, water filtration, food and beverage, probiotics and electronics markets.”

DuPont last week announced it had shipped loads of Tyvek from its Virginia factory to the U.S. government for use in protective suits.

But NBC noted that a lot of the revenue went elsewhere, noting that distributor W.W. Grainger paid DuPont $4 a suit, after they were manufactured in Southeast Asia, and then shipped and sold to the U.S. government for $7.96 each. Grainger told reporters it cost more to reduce the turnaround time from the usual three months to 10 days.

The owner of First Citizens Community Bank has agreed to pay a revised $27 million in stock and cash for MidCoast Community Bancorp Inc., including its $231 million in loans and $213 million in deposits, plus two branches in suburban Wilmington and one in Dover, Del.

That’s down $4 million from the price that First Citizens agreed to pay last year, with the drop following the steep fall in bank stocks since coronavirus closures sent the U.S. economy into a rapid contraction.

First Citizens plans to expand into the Philadelphia area next, chief executive Randall Black told me. Philadelphia-based Janney Montgomery Scott advised the buyer. Boenning & Scattergood of West Conshohocken advised the seller.

“We’re looking at Chester County,” where First Citizens has already landed $35 million in business and mushroom-farm loans, Black added.

He said the lower price was “not so good” for MidCoast shareholders, “but we are going to give them something back” as profits rebound.

First Citizens is owned by publicly traded Citizens Financial Services Inc. (stock symbol CZFS), based in Mansfield, Pa., and not to be confused with the larger Citizens Financial Group (CFG ) which owns Citizens Bank and naming rights for the Phillies stadium.

Are stock values nearly done deflating? The NASDAQ Bank Index is down more than 30% so far this year, but that hasn’t been enough for sellers to scrap prior deal agreements, notes Charles K. Hull, managing director at Boenning & Scattergood.

But future proposals “have been put on hold, given drops in buyers’ share prices as well as the current economic and regulatory uncertainty.”

Germany-based Christian Klein is taking over as exclusive Chief Executive Officer of SAP, as his former co-CEO Jennifer Morgan, based at its 3,000-person Newtown Square offices, departs per “mutual agreement.”

Morgan’s departure comes just six months into the Germany-based enterprise-software giant’s traditional two-executive death match that determines its top executive.

Their predecessor, Bill McDermott, became sole CEO after a similar two-man arrangement in 2010-14, then ran SAP for five years before departing last fall. He is now boss at San Jose-based ServiceNow.

“The current environment requires companies to take swift, determined action which is best supported by a very clear leadership structure,” SAP said in a statement. Morgan’s departure will help “ensure strong, unambiguous steering in times of an unprecedented crisis.”

“I have full faith in Christian’s vision and capabilities,” Hasso Plattner, executive chairman of the SAP supervisory board, said in a statement.

iHe and Klein, 39, thanked Morgan, 48, for her service. Morgan thanked Plattner for the “great privilege” of her 16 years (corrected) at SAP. She earlier headed the company’s Cloud Business Group, among other key positions.