US Dow Q3 net profit down 25.3% amid strong underlying growth

28 October 2010 12:51  [Source: ICIS news]

A Dow facilityLONDON (ICIS)--Dow Chemical reported robust underlying growth in the third quarter driven by stronger prices and performance products growth, but a net profit for the period down 25.3% at $597m (€436m), it said on Thursday.

The prior year quarter’s net result included gains from the sale of Netherlands refiner TRN and the Optimal business in Malaysia.

Dow said that net income from “continuing operations excluding certain items” was $705m from $357m in the 2009 third quarter.

“Dow’s transformed portfolio delivered accelerated earnings growth this quarter, resulting in a two-fold increase over last year,” said CEO Andrew Liveris.

“Continued solid demand recovery in North America and Europe – coupled with sustained momentum in emerging geographies, which represented more than $4bn of our overall sales in the quarter - drove robust revenue gains across all of our operating segments and in every geographic area.

"Our operating rates reached levels not seen since the first quarter of 2008, reflecting both broad-based demand growth and a return to our signature operational excellence capabilities,” he added.

Dow’s third quarter sales were up 6.8% as reported at $12.9bn but were 23% higher excluding the impact of divestments.

Sales volumes were 14% higher with gains in all geographies and all operating segments, Dow said.

The largest volume increases were in Europe, the Middle East, Africa and North America.

Volumes and profits were up strongly in the performance products segment, which includes businesses bought from the speciality materials maker Rohm and Haas.

Dow’s performance Systems businesses also reported strongly higher earnings before interest, tax, deprecation and amortisation.

Sales prices were up 9% with increases for basic chemicals and basic plastics buoying those businesses.

Dow’s global operating rate was up 8 percentage points year on year and 6% sequentially at 86%, the highest operating rate since the first quarter of 2008.

Liveris said Dow was confident in a sustained global economic recovery. “Our view is that robust growth in emerging economies will continue as domestic demand in faster growing geographies such as Brazil, Asia, Middle East and eastern Europe is further strengthening in a number of leading end-markets, including amongst others infrastructure, transportation, and packaging," he said.

“We are also encouraged to see signs of improved growth in North America and Europe, especially Germany, which point toward increased momentum in the developed regions."

Liveris added: "We expect growth in the developed world will be at a slightly lower rate than experienced in the first half of the year – importantly, it is growth, nonetheless."

Dow’s earnings were at the top end of financial analysts estimates at $0.45 for the period.

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By: Nigel Davis
+44 20 8652 3214



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