10 August 2010 20:58 [Source: ICIS news]
“The positive outlook reflects our view that the economic recovery will support at least modest revenue growth in 2011 and that Dow has the capacity to improve its financial profile to a level that would support somewhat higher earnings,” S&P said.
It is the second time this year that S&P has raised its outlook for Dow. The ratings service had upgraded Dow to stable from negative on 2 February.
S&P noted that Dow had made substantial progress toward reducing debt and improving its financial profile following its 2009 acquisition of Rohm and Haas. That acquisition had led S&P to assess Dow’s financial risk as significant.
S&P affirmed its ‘BBB-’ corporate credit rating on Dow, considered the lowest investment-grade rating.
“Dow’s strong business profile benefits from extensive diversity across markets served and an improving product mix that places greater emphasis on specialty chemicals and materials that offer less earnings cyclicality than commodity chemicals and plastics,” S&P said.
S&P made the upgrade despite Dow falling short of Wall Street consensus estimates for second-quarter earnings, compared with higher-than-expected results from most US chemical companies.Dow swung to a net profit of $659m (€501m) in the second quarter, compared with a loss of $332m in the same period of 2009 amid stronger volumes and price gains.
Dow traded higher by 9 cents, or 0.4%, to $26.09/share in Tuesday trading on the New York Stock Exchange.
($1 = €0.76)
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