DOVER, Del. (AP) -- The chemicals giant DuPont reported a nearly 12 percent decline in second-quarter earnings Tuesday partly because of lower pricing for titanium dioxide, a widely used whitening pigment, and said it is exploring a possible sale or spinoff of its performance chemicals unit.
DuPont Co. is a global leader in production of titanium dioxide, or TiO2, but has wrestled for more than a year with sluggish demand for the whitener, which is used in broad range of products from automotive and house paints to toothpaste.
Titanium dioxide is a key part of DuPont's performance chemicals business, but CEO Ellen Kullman noted Tuesday that the markets for performance chemicals are cyclical and volatile, and that they have low growth profiles compared to other DuPont products.
"These are strong healthy businesses ... but DuPont has always embraced change," she told analysts. "We are always looking around the next corner."
Kullman said no decisions have been made and no timetable set for determining the future of the performance chemicals unit, which generated total sales of $7.2 billion in 2012.
Meanwhile, the Wilmington, Del.-based company reported net income of $1.03 billion, or $1.11 per share, for the quarter ending June 30, compared with $1.17 billion, or $1.23 per share, for the same period last year. Revenue fell 1 percent to $9.8 billion as lower selling prices and currency effects offset an overall 1 percent volume gain.
Wall Street analysts surveyed by FactSet were expecting higher earnings of $1.27 per share and revenue of $10.04 billion.
DuPont's announcement that it may shed the performance chemicals business appeared to partially offset worries about the financial performance for the quarter.
The company's shares slipped 5 cents to close at $57.12 Tuesday after rising earlier in the day as high as $60.40 per share — its highest level since September 1999.
DuPont's agriculture unit continued to lead the company's overall performance, posting a 7 percent gain in sales on higher prices and a slight increase in volume. The company said agriculture segment sales grew 11 percent in the first six months of the year, driven by seed prices and volume growth in corn seeds, insecticides and fungicides. First half operating earnings are up 8 percent despite higher seed input costs, DuPont said.
"Agriculture sales remained strong in the second quarter and titanium dioxide volume improved," Kullman noted. "As expected, this was largely offset by a substantial decline in performance chemicals earnings from last year's peak levels."
The company's electronics and communications segment saw sales drop 18 percent on both lower prices and volume declines amid weak demand in photovoltaics markets.
Companywide, total segment operating earnings fell 17 percent to $1.9 billion. Overall sales volumes fell 1 percent in North America for the quarter but increased 12 percent in Latin America and 5 percent in Europe, the Middle East and Africa.
The performance chemicals unit's sales fell 9 percent as a 15 percent pricing decline offset a 6 percent volume gain.
While TiO2 volumes increased 12 percent compared to last year's second quarter, operating earnings for the performance chemicals segment declined by $330 million, or 56 percent, from peak levels last year, largely because of lower prices for titanium dioxide.
Last summer, Kullman shrugged off short-term weakness in demand for TiO2, telling analysts that the overall fundamentals in the market were "robust." Chief Financial Officer Nick Fanandakis said at the time that DuPont was still "very bullish" on the mid- and long-term prospects for titanium dioxide.
"The market dynamics changed significantly in the third quarter of last year," Kullman said Tuesday, pointing specifically to economic conditions in China, a key market for TiO2.
Kullman noted that DuPont is continuing to focus on its transformation from a traditional chemicals company to an integrated, science-based company building on its strengths in chemistry, biology and material sciences. The company's three strategic priorities are focused on growth and development in agriculture and nutrition, advanced materials and bio-based industrial products such as biofuels.
"DuPont's breadth in science is uniquely relevant," she said.