DuPont's weak sales, forecast gives Peltz more ammo in proxy war

(Reuters) - DuPont's weak quarterly sales and lowered annual profit forecast provided fresh ammunition to Nelson Peltz in his campaign to win board seats and split up the chemical maker.

Peltz's hedge fund Trian Fund Management, DuPont's fifth-largest shareholder with a 2.7 percent stake, has for months criticized DuPont's underperformance.

Trian launched a proxy battle in January for four board seats, including one for Peltz. DuPont has said it could accommodate one of Trian's nominees, but not Peltz himself.

"This board has a long record of underperformance," Peltz said at an investor meet in New York on Tuesday, adding that it was time for "adult supervision" on the board.

He criticized some of the company's strategies, especially the sale of its coatings business in 2013, and called DuPont a "fog of bureaucracy."

The proxy battle will come to a head on May 13, when DuPont holds its annual shareholder meeting.

"Dupont today reported yet another disappointing quarter," Ed Garden, Trian's founding partner and chief investment officer, told Reuters.

"When will Dupont's board begin to hold management accountable for this chronic underperformance?"

DuPont said on Tuesday it expects full-year operating earnings to be at the low end of its previous forecast as a strong dollar hurts overseas revenue.

DuPont, which gets about 60 percent of its sales from outside the United States, said first-quarter sales fell 9 percent - the biggest decline in five quarters.

Operating profit of $1.34 per share beat analysts' estimate of $1.31, according to Thomson Reuters I/B/E/S.

Excluding an impact of 25 cents per share from the stronger dollar, the company would have reported a profit of $1.58 per share, unchanged from its earnings a year earlier.

Some brokerages such as RBC Capital Markets said DuPont's results were "commendable," given the strong dollar and a weak agriculture business.

DuPont Chief Executive Ellen Kullman told Reuters that while the strong dollar had hurt revenue, cost-cutting efforts were adding to the bottom line.

DuPont is targeting annual cost cuts of $1 billion and said it now expects savings to add 40 cents per share to 2015 profit, up from its previous forecast of up to 35 cents.

Trian contends the company can save $2 billion-$4 billion in costs every year by separating its volatile materials businesses from more stable businesses.

DuPont, which is spinning off its performance chemicals unit, has said Trian's demand to split the company would cost $4 billion.

(Editing by Sayantani Ghosh and Saumyadeb Chakrabarty)