It's been an active
year for
Dow Chemical (NYSE: DOW), and Thursday's
earnings announcement -- like its fellow chemicals giant
DuPont (NYSE: DD)
earlier in the week-- didn't do anything to dampen the
spirit at the company. Indeed, amid a sloppy economy and the
events surrounding a major acquisition, Dow produced one
awfully good quarter.
For the quarter, the company turned in earnings of $711
million, or $0.63 per share. This is up from $428 million, or
$0.46 per share, a year earlier. If you're keeping track,
that was a 37% increase in earnings per share. Revenue,
however, was down 22% to $12.05 billion. It still exceeded
Wall Street's expectations of $11.85 billion. Nevertheless
management warned that it continues to anticipate a rough
year in 2010.
Still, the current quarter showed an improving business
climate. Sequential quarterly revenues increased by 6%, and
if you back out the seasonality inherent in Dow AgroSciences,
volumes were 3% higher than in the prior quarter. At the same
time, on a pro forma basis -- primarily to back out the
effects of the Rohm & Haas acquisition -- sales slid by
32% year over year.
Focusing on Dow's sequential approach, which given our
rapidly changing business conditions seems the most relevant,
fully five of its segments were up quarter-over-quarter. Only
two groups (Health and Agricultural Sciences, along with
Basic Chemicals) dipped sequentially.
But, as CEO Andrew Liveris noted during the company's
conference call, much of the sequential strengthening
resulted from Chinese demand. As he pointed out, "...here are
some examples of the sequential volume growth we experienced
in China, in particular: electronic materials, up 15%;
coating and infrastructure up 16%; automotive up 5%; and
polyethylene, up 10%." He also noted that Brazil has
similarly "rebounded very quickly."
So while the likes of
United Technologies (NYSE: UTX),
3M (NYSE: MMM),
Ingersoll-Rand (NYSE: IR), and
Caterpillar (NYSE: CAT) took a meat ax to
costs, but still suffered earnings declines, Dow was able to
experience a busy quarter -- or year, for that matter -- and
still crank up its profits. That, my Foolish friends, is the
sort of company I want in my portfolio. Â
Caterpillar carries a four-star
Motley Fool CAPSrating.
Why go to
its CAPS
pageand add your thumbs up or down to the company's
assessments?
This article was originally published as
You Simply Can't Ignore Dow Chemicalon
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