Dow Chemical swings to net profit of $659m as sales rise 20%

03 August 2010 13:16  [Source: ICIS news]

Dow swings into profitLONDON (ICIS)--Dow Chemical swung to a net profit of $659m (€501m) in the second quarter, compared with a loss of $332m in the same period of last year, on stronger volumes and price gains, the US chemical major said on Tuesday.

Reported sales for the three months ended 30 June rose 20% year on year to $13.6bn, Dow said.

Excluding acquisitions and divestitures, Dow said its sales were up 26% from the 2009 second quarter, driven by price gains of 19% and volume growth of 7%.

Dow added that gains were up in all operating segments and in all geographic areas, with particular strength in North America and Europe, the Middle East and Africa.

Emerging geographies collectively posted volume gains nearly double that of the total company, Dow said.

“Dow continued its earnings growth trajectory in the second quarter, with double-digit sales gains, continued progress in growth synergies and above-target structural cost reductions driving higher results,” said Dow chairman and CEO Andrew Liveris.

“Strong demand growth in North America and Europe, combined with continuing demand momentum in emerging economies, drove revenue improvements across all of our operating segments,” he added.

Additionally, Liveris said that with the completed divestment of Styron, Dow exceeded its goal of divesting $5bn in non-strategic assets in less than two years.

“With the proceeds of these divestments and positive operating cash flows, we made further meaningful progress in strengthening our balance sheet,” he added.

Dow said its second-quarter underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were $1.9bn.

“Improved demand and price gains overcame a $100m increase in turnaround costs and a $1.6bn increase in purchased feedstock and energy costs,” it said.

Dow’s combined performance segments delivered more than 70% of EBITDA in the quarter, the group added.

Looking ahead, Liveris said the company continued to have confidence that momentum was gradually building.

Dow, he said, expects a sustained global recovery led by Asia, which would be “slowly helped by the US recovery, but with Europe lagging”.

“Dow has continued to experience high demand for products in downstream, market-driven sectors. Against this backdrop, we remain focused on executing our strategic and financial plan,” Liveris said.

($1 = €0.76)

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