23 October 2008 12:54 [Source: ICIS news]
LONDON (ICIS news)--Dow Chemical’s third-quarter earnings per share (EPS) slumped 29% year-on-year, excluding certain charges and gains, as profits from its hurricane-hit performance plastics and basic chemicals businesses tumbled, the company said on Thursday.
Third-quarter EPS was $0.60 against $0.84 in the third quarter of 2007, Dow said.
Net profits for the period were 6.2% higher at $428m (€334m), compared with $403m in the year-earlier period, with lower tax charges helping the most recent reporting period.
The chemical major said it was also hit by a 48%, or $2.6bn, surge in feedstock and energy costs, the largest increase in its history.
CEO Andrew Liveris warned of a global recession persisting through 2009 and said Dow would accelerate its focus on cost and capital control and on asset restructuring.
''Dow is well positioned, however, to weather this increasingly difficult economic downturn,” he said. “We have a strong balance sheet [and] we have a track record of strong financial discipline,” he added.
Sales were 13% higher at $15.4bn aided by a 22% increase in global prices, the largest year-on-year percentage increase, Dow said, since the first quarter of 2005.
Volumes were down 9% and hurt by the impact of Hurricanes Gustav and Ike. The volume decrease excluding the impact of those storms, however, was 5%.
Margin expansion was not achieved in both the basic and performance segments, as the hurricanes idled approximately 80% of the company’s North American capacity in September, when feedstock costs were declining, Dow said.
Earnings before interest and tax (EBIT) for Dow’s performance plastics business plunged to $146m in the quarter from $409m in the third quarter of 2007, while basic plastics' EBIT was down 13.4% at $481m against $556m in the third quarter of 2007.
Basic chemicals' EBIT dropped to $64m from $205m in the year-earlier quarter.
Profits from Dow’s agriculture businesses were higher and the company saw stronger income in the quarter from its joint ventures.
“Dow performed well in the third quarter despite a difficult economy and increased costs,” Liveris said.
“Our ability to take proactive measures, including the implementation of two broad-based price increases and aggressive cost controls, allowed us to post solid results against worsening market conditions, record high raw material costs and two hurricanes on the US Gulf,” he added.
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"These issues have now been exacerbated by the lack of credit, resulting in a drop in demand not only in the
"In our view, we will likely see a global recession through most of 2009," Liveris said.
($1 = €0.78)
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