Sales of automobile paint and plastics helped DuPont

post a higher-than-expected quarterly profit, though higher raw material costs raised concern about margin pressure this year.

More expensive crude oil and other supplies caused a 15 percent drop in the company's net income. DuPont has been able to pass on those costs in the past, but it's not clear how much longer it will be able to do so as energy prices continue to climb.

The fact that they are passing through (higher raw material costs) is telling you that underlying demand for their business is pretty strong, CLSA analyst Mark Connelly said. There's no question that costs are going to rise; the question is whether or not they'll be able to pass it through.

DuPont's smaller rival Ashland also reported higher supply costs during its quarterly earnings announcement on Tuesday.

What's interesting about this is that you have a big dichotomy between oil and natural gas prices. So it'll be a mixed bag, Soleil Securities analyst Mark Gulley said. Raw materials based on natural gas will be well-behaved, those based on oil will not.

While supply costs remain a concern, analysts generally were pleased with the report. Five of DuPont's six units reported double-digit sales jumps and revenue rose in all regions.

I'm happy with the numbers because they're getting volumes. The volume story hasn't ended yet, Connelly said.

DuPont reported fourth-quarter net income of $376 million, or 40 cents per share, compared with $441 million, or 48 cents per share, a year earlier.

Excluding charges for job cuts and other items, DuPont earned 50 cents per share. By that measure, analysts expected earnings of 32 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 15 percent to $7.4 billion. Analysts expected $6.95 billion.

Sales in DuPont's performance chemicals unit, which sells titanium dioxide paint to car makers, rose 26 percent. The unit also brought in the largest slice of DuPont's operating income, roughly $315 million.

Ford Motor Co is one of DuPont's biggest customers.

The performance materials unit, which makes plastics for automakers to cut down on the amount of metal they use, saw sales jump 11 percent.

The $117 million operating loss in DuPont's agricultural unit was much less than expected, due in part to strong performance in South America. The unit typically loses money in the fourth quarter due to preparations for the North American spring planting season.

DuPont also raised its 2011 earnings forecast to a range of $3.45 to $3.75 per share. It previously forecast $3.30 to $3.60 per share, and Wall Street expects $3.11 per share.

The update was due in part to a lower tax rate, brought on in part by a tax agreement between U.S. President Barack Obama and Congress. The company was also over-accruing for taxes for the first part of the year, Gulley said.

Earlier this month, DuPont said it would further expand into food by buying Denmark-based food additives maker Danisco for $5.8 billion cash.

The buyout will drain 2011 earnings by 30 cents to 45 cents per share, DuPont said.

Shares of the Wilmington, Delaware-based company rose 36 cents to $49.25 in premarket trading.

ASHLAND

Ashland reported net income of $87 million, or $1.09 per share, compared with $86 million, or $1.10 per share, a year earlier.

Excluding one-time items, the company posted a profit of 79 cents per share. By that measure, analysts expected earnings of 65 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 8.2 percent to $1.43 billion. Analysts expected $1.40 billion.

Shares of Covington, Kentucky-based Ashland rose 35 cents to $53.61 in premarket trading.

(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

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