S&P upgrades Dow Chemical outlook on improved earnings

02 February 2010 23:17  [Source: ICIS news]

HOUSTON (ICIS news)--Standard & Poor’s (S&P) upgraded the outlook on Dow Chemical to stable from negative as the US producer’s operating and cash flow performance has improved, the ratings service said on Tuesday.

The upgrade came after Dow’s fourth-quarter earnings release early Tuesday, in which the company swung to a profit of $87m (€63m) from the $1.55bn loss reported a year ago on volume gains across almost all operating segments and stronger equity earnings.

“We expect operating results to continue to improve as economic conditions recover, which is likely to support further strengthening of the financial profile over the next one to two years,” S&P said.

The stable outlook takes into account Dow’s initiatives to solidify its financial profile, including aggressive cost reductions, the completion of 43.4bn in asset sales, and long-term debt financings through which Dow has fully repaid the bridge financing associated with its Rohm and Haas acquisition, S&P said.

The Rohm and Haas deal initially gave Dow a significant financial risk profile, S&P said.

S&P also affirmed its ‘BBB-‘ corporate credit rating on Dow and its subsidiaries, Rohm and Haas and Union Carbide.

Dow closed down $1.06, or 3.7%, to $27.57/share in Tuesday trading on the New York Stock Exchange.

($1 = €0.72)

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By: Ben DuBose
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