27 July 2011 14:07 [Source: ICIS news]
LONDON (ICIS)--Price hikes and increased sales volumes in performance products, plastics and chemicals helped boost US petrochemicals major Dow Chemical’s second-quarter earnings by 63%, a report issued by the company on Wednesday shows.
Dow reported net income of $1.1bn (€759m) for the three months to the end of June, up from $659m during the same period a year earlier. Global revenues topped $16bn, the company said, up from $13.6bn in 2010.
Net income for the first half of 2011 hit $1.8bn on the back of sales of $30.8bn, compared with profits of $1.2bn and sales of $27bn in the first six months of 2010, Dow said. Meanwhile, sales in emerging markets hit $4.9bn in the second quarter, a record for Dow.
“Our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is now performing at a new level,” said Dow chairman and CEO Andrew Liveris.
“This is fuelling higher-growth, higher-margin performance through superior market reach, customer intimacy and innovation," he added. "We’re delivering all of this while maintaining our steadfast commitment to enhance financial flexibility by paying down debt, and increasing shareholder remuneration. Coupled with the strength of our integrated business model, Dow is firmly on the right strategic path of sustained earnings growth.”
The company’s plastics division, which produces polyethylene (PE) and polypropylene (PP), showed the strongest growth of all Dow’s business units, recording an increase in sales of 30% in the second quarter. Volumes were up 10%, while prices for plastics were up 20% on average, according to Dow. The plastics division’s earnings before interest, tax, depreciation and amortisation (EBITDA) was $751m for the quarter, up from $696m a year earlier.
Performance products, including amines, epoxy resins, polyglycols, surfactants and fluids, also recorded strong sales increases, with revenues up 29%, largely on the back of a 20% hike in prices. EBITDA at the performance unit was $387m, up from $330m in 2010.
The company’s chemicals and energy unit recorded sales of $1bn, up 23% from a year earlier. Sales growth was largely driven by a 26% increase in prices, although a 3% hike in volumes also helped drive revenues up. EBITDA for the unit was $282m, almost three times the $100m it made in the second quarter of 2010.
Dow continued to cut its long-term debt in the second quarter, a key strategic goal. Debt stood at $18.5bn at the end of the quarter, compared with $20.6bn at the end of December 2010.
A total of $4bn of debt has been paid down in 2011 so far, $1.5bn of it in the second quarter, Dow said, reducing interest payments by $250m a year. The company has $661m in debt repayments to make in the year to June 2012, compared with the $1.76bn it was due to pay off in the year ending December 2011.
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