UpdateFirm pricing, lower costs offset reduced sales for Dow's Q1
25 April 2013 13:36 [Source: ICIS news]
(updates throughout, adds segment detail)
By Tom Brown LONDON (ICIS)--Dow Chemical’s first-quarter net income increased 27% year on year to $660m (€508.2m) despite reduced sales and volumes, as a result of firmer pricing and lower costs, the US chemicals giant said on Thursday.
The company reported $14.4bn in sales for the quarter compared to $14.7bn during the same period last year, as a result of flat volumes in North America and a 12% decline in western European sales.
A 2% uptick in emerging markets sales, driven by a 6% increase in Latin America, was insufficient to prevent a 3% year-on-year decline in global volumes for the quarter.
The company addressed this by successfully pushing through price increases for most business divisions and geographies, resulting in a 1% overall price rise. Purchased raw material costs, including oil and energy, dropped by nearly $300m during the quarter, Dow added.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was $2.2bn during the quarter, compared to $1.7bn in the first quarter of 2012.
“We are aggressively managing our businesses and driving near-term execution measures – demonstrated by this quarter’s marked improvement in both margins and profitability,” said Dow CEO Andrew Liveris.
“We continue to deliver on our plan by implementing cost and cash flow actions, paying down debt, improving return on capital and taking firm decisions on our portfolio,” he added.
EBITDA for Dow’s performance materials division for the quarter was $440m, a fall of 15% from the $518m reported in the first quarter 2012. Last year’s first-quarter EBITDA figure had been adjusted upward from earlier estimates of $332m. The company noted strong price improvements for polyurethanes, formulated systems and oxygenated solvents.
Volumes fell for polyurethanes and epoxy, which the company attributed to aggressive price increases to improve underlying profitability.
Performance plastics division EBITDA was $952m compared to $718m in the first quarter of 2012, driven by record elastomers volumes on the back of stable automotive production in North America and improvements in the adhesive markets. Growth was offset by a weak European market, Dow added.
Coatings and infrastructure solutions EBITDA was $186m, down from adjusted earnings of $245m in the first quarter of 2012 on the back of the ongoing European construction sector slump. Agricultural sciences posted record quarterly earnings of $484m, a 7% year on year increase, on the back of strong North and Latin American demand.
EBITDA for the electronic and functional materials division was $273m, compared to adjusted earnings of $260m in the first quarter 2012, due to increased volumes across all sectors.
Liveris added that he expects the company’s performance to continue to improve over the course of the year, and no significant change of course is necessary at present.
“We have previously stated that our business plans did not call for material macroeconomic improvements in 2013 versus 2012. Given persistent volatility and uncertainty, this remains the right mindset for operating the company,” he said.
($1 = €0.77)By: Tom Brown+44 208 652 3214
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