JPMorgan lowers Dow's EPS forecast on R&H deal

28 July 2008 11:59  [Source: ICIS news]

LONDON (ICIS news)--JPMorgan on Monday reduced its 2009 earnings estimate for Dow Chemical due to amortisation charges from the prospective Rohm and Haas acquisition and lower forecasts for R&H’s 2009 earnings.


Dow earlier this month agreed to buy the US specialty chemicals maker for $18.8bn (€12bn). CEO Andrew Liveris said the deal would lay the foundation to lift earnings growth in Dow’s performance products and advanced materials businesses.


JPMorgan lowered Dow’s earnings per share (EPS) estimate for 2009 to $2.85 from $3.10 based on an estimated annual amortisation increase of $300m following the R&H deal.


The bank forecasted synergies of $200m for the year after the acquisition - conservative compared with Dow’s estimate of $800m over a two-year period.


Dow last week reported a 26.7% plunge in second-quarter net profits to $762m from $1.04bn, on surging hydrocarbon and energy costs.


($1 = €0.64)

By: Mark Watts
+44 20 8652 3214

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