03 February 2009 13:32 [Source: ICIS news]
LONDON (ICIS news)--Dow Chemical reported a net loss of $1.55bn for the fourth quarter of 2008 on Tuesday as demand dropped away sharply and the company took restructuring and other charges.
The loss compares with a net profit in the 2007 fourth quarter of $497m (€388m).
Dow’s sales in the quarter fell 23% to $10.9bn. Volumes declined 17% and were down in all operating segments and geographic regions reflecting, Dow said, the global economic downturn and de-stocking through most product chains.
Operating rates were reduced to historically low levels of 44% in December. The fourth quarter operating rate of 64% had not been seen in 25 years, the company added.
Net after tax charges on the results in the fourth quarter of 2008 totalled $978m and related to restructuring goodwill impairment and hurricane reflected charges, among others. The pre-tax restructuring charge for the quarter was $839m.
“With a global economic crisis unfolding during the quarter, we responded with speed and urgency to get ahead of the demand destruction that continued to accelerate as we approached the end of the year,” chairman and CEO Andrew Liveris said.
“We immediately put in place a full array of aggressive cash generation and cost and capital control measures that delivered results. We remain intensely focused on those actions that we can control and will continue to do so throughout 2009,” he added.
Dow’s underlying loss for the quarter was $0.62/share, which compares with a profit of $0.84/shae reported for the fourth quarter of 2007.
The company was hardest hit in its basic plastics and chemicals businesses with demand dropping off sharply. Basic chemicals segment sales for the quarter were down 39% and the segment reported a loss of $237m from a profit of $309m last time.
Basic plastics sales were down 38% and the quarterly loss $315m against a profit of $394m in the fourth quarter of 2007. Performance plastics sales were down 20% and the loss for the 2008 quarter was $409m against a prior year fourth quarter profit of $158m.
Liveris warned that Dow was assuming that the late 2008 level of demand would continue for several quarters and possibly beyond.
“Most of our value chains are running at very low inventory levels, and when a recovery begins, possibly through government stimuli in the back half of the year, the recovery could be rapid," he said.
"Having said that, we are planning for a global recession throughout 2009 and will continue to take actions on managing our cash and controlling our costs with the same intensity that we demonstrated in the fourth quarter.”
($1 = €0.78)
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