Dow Chemical’s Q3 net income falls 35% on weaker sales

LONDON (ICIS)–Dow Chemical’s third-quarter net income fell 35% to $582m (€448m) on weaker sales, particularly in Europe, the US-headquartered chemicals major said late on Tuesday.

Net sales for the three months ended 30 September were $13.6bn, down 10% year on year. The decline was led by Europe, where sales decreased by 10%, driven by adverse currency conditions totalling more than $520m, Dow said.

The Company’s operating rate was 83% for the quarter, flat versus the corresponding period last year and up five percentage points versus the prior quarter, Dow said.

Andrew Liveris, Dow’s chairman and CEO, said: “Dow’s results this quarter demonstrate the acceleration and delivery of our cost reduction actions. We focused on execution and intervened to protect our prioritised growth path.”

“Our low-cost feedstock advantage enabled us to deliver volume growth – despite weakening demand. And we have delivered improvements in operating cash flow through our disciplined approach,” he added.

Dow was expected to announce its third-quarter earnings on Thursday before the opening of the US market. However, due to an inadvertent and premature release of a restructuring announcement, the company decided to released its earnings early.

Dow was forced to announce a restructuring program on Tuesday after accidentally sending a draft of its press release to a Bloomberg  news reporter earlier in the day, sources said. The company had intended to announce the 2,400 layoffs on Thursday morning along with quarterly earnings.

“Further, with today’s restructuring announcement, we now have a full array of aggressive cash generation measures in place, with tight controls on working capital, and reductions in costs and capital expenditures – particularly in Europe – and by strict and firm prioritisation of our growth projects. Moving forward, Dow is squarely focused on driving cost efficiencies, generating cash and earnings growth,” Liveris said.

“Dow enters the fourth quarter and heads into 2013 on our front foot. We previously outlined $2.5bn of levers we could pull to mitigate a slowing world economy. These actions are not only in motion, but are beginning to take hold, as we demonstrated this quarter,” he added.

($1 = €0.77)