Dow Chemical 1st-quarter earnings grow 34 percent

AP News
Posted: Apr 28, 2011 6:21 PM
Dow Chemical 1st-quarter earnings grow 34 percent

The Dow Chemical Co. said Thursday its first-quarter net income jumped 34 percent on stronger sales of products used in everything from smartphones to farming.

The manufacturing giant noted first-quarter sales were robust in emerging countries, such as in the Asia Pacific region and Latin America, but it also saw improvement in regions where economic growth has lagged, such as North America.

Dow Chemical said it believes the economy will continue to improve in the United States, Western Europe and other developed countries despite high unemployment rates, lingering sovereign debt problems and inflation concerns.

The Midland, Mich., company reported net income of $625 million, or 54 cents per share, for the three-month period ended March 31. That compared with $466 million, or 41 cents per share, for the first quarter in 2010.

Adjusted to exclude certain one-time items such as extinguishment of debt and costs related to the Rohm and Hass acquisition, earnings in the most recent quarter were 82 cents per share.

Revenue increased 10 percent to $14.73 billion.

Analysts expected quarterly earnings of 67 cents per share on sales of $13.95 billion, according to FactSet.

Overall sales volume rose 8 percent in the quarter, with gains across all operating segments and locations where Dow Chemical does business.

Prices rose 12 percent, offsetting higher energy costs. All operating segments reported double-digit price increases, except electronic and specialty materials and health and agricultural sciences, which each rose 3 percent.

Double-digit sales increases were recorded in business segments ranging from health and agricultural science products to electronic and specialty materials, coatings and infrastructure, plastics and performance products.

"At the segment level, a common thread was Dow's ability to pass through challenging propylene (raw material) cost increases," Goldman Sachs analyst Robert Koort told analysts in a research note.

"While some will discount the fact that, once again, much of the out-performance came from a commodity business (chemicals and energy), we believe these were solid results," he stated.

Dow Chemical has adopted a strategy of moving away from its basic plastics business and toward specialty materials acquired in the 2009 purchase of Rohm and Haas.

Specialty materials are used in a range of products, including consumer electronics such as LCD televisions and smartphones and performance-related products.

During a conference call with analysts, Chairman and CEO Andrew N. Liveris said the company will continue to look for opportunities to divest non-value added businesses, such as commodity-related plastics.

The results were similar to those reported last week by DuPont Co. Its first-quarter net income was $1.43 billion, or $1.52 per share, compared with $1.13 billion, or $1.24 per share, for the year-ago quarter. Revenue jumped 18 percent to $10 billion.

Shares of Dow Chemical rose 79 cents to close at $40.71 Thursday while DuPont rose $1.13 to $56.75.