Earnings preview: Dow Chemical Co.

AP News
Posted: Jul 25, 2011 2:46 PM
Earnings preview: Dow Chemical Co.

The Dow Chemical Co. will report higher second-quarter results Wednesday before the market opens. Most investors are awaiting the manufacturing giant's outlook for the second half of the year.

WHAT TO WATCH FOR: Any impact on business from a softer global economy and raw materials costs.

The Midland, Mich., company has benefited from an expanded portfolio of products; particularly in fast-growing, emerging markets of China, India, Eastern Europe and Brazil.

During the second quarter, growth slowed in some parts of the world, including the U.S., as consumers watched their spending more closely because of high fuel and food prices. In addition the earthquake and tsunami in Japan created a widespread parts shortage that affected manufacturing for many products such as automobiles and consumer goods.

Dow Chemical Co. Chief Financial Officer Bill Weideman told analysts on June 14 that Dow has seen continued "strong growth" in China, despite the government's efforts to slow the economy and curb inflation. There were other pockets of strength in Brazil and Northern Europe, although debt issues caused growth to lag in Southern Europe.

On Monday Dow Chemical and the Saudi Arabian Oil Co. said that they are pushing forward with plans to build a $20 billion chemical complex in the desert kingdom that they say will be among the world's biggest.

The decision by both companies' boards to create a new joint venture, called the Sadara Chemical Co., formalizes a project that has been in the works since 2007.

WHY IT MATTERS: Dow Chemical manufactures a wide range of products used in manufacturing and farming, ranging from automobile paint and films for LCD televisions to basic plastics.

WHAT'S EXPECTED: Analysts surveyed by FactSet predict earnings of 79 cents a share on sales of $14.75 billion.

Citigroup Global Markets analyst P.J. Juvekar expects the company to report a strong second quarter but offer a cautious outlook for the second half, particularly in Asia.

LAST YEAR'S QUARTER: Dow Chemical earned $566 million, or 50 cents per share. Revenue totaled $13.62 billion. Its stock closed the quarter at $36 a share, down from $37.75 on March 31.