(updates with region, segment financials in paragraphs 3 - 9)
LONDON (ICIS)--Dow Chemical’s net income for the first quarter of 2014 jumped 75% year on year to $964m on the back of expanded margins and strong sales for its performance plastics and coatings and infrastructure solutions divisions, the US-based chemicals company said on Wednesday.
Sales increased by 1% year on year during the period to $14.5bn, while earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 9% to $2.4bn, with improved performances noted for all divisions except feedstocks and energy.
Emerging market sales grew by 3% year on year on an adjusted basis, driven by a 7% increase in Greater China sales. Volume declines in North America as a result of the cold weather were offset by price gains, and sales in western Europe also saw a slight year-on-year increase due to volume growth, the company said.
An increase in margins for the quarter was achieved despite a $300m rise in purchased feedstocks and energy costs, which the company aimed to offset with cost control measures.
Performance plastics EBITDA grew by 5% year on year to $1bn despite rising feedstock costs as a result of double-digit sales gains in Asia Pacific and North America for the division’s packaging and specialty plastics subsidiary.
Performance materials EBITDA was flat year on year for the quarter at $440m, as sales gains for polyurethane products, particularly propylene oxides and glycols, were offset by inclement weather in North America.
Sales for polyglycols, surfactants and fluids, oxygenated solvents and amines were also impacted by the conclusion of marketing responsibilities related to a former joint venture, Dow added.
Coatings and infrastructure solutions EBITDA rose $38m year on year to $224m, on the back of increased demand from the architectural and industrial coatings markets, with performance monomers posting higher sales in all regions.
Agricultural sciences EBITDA rose 9% year on year to $529m due to increased volumes and lower operating expenses. Feedstocks and energy EBITDA fell 28% during the quarter to $173m on lower caustic soda prices and reduced equity earnings due to lower glycol prices.
CEO Andrew Liveris predicted a slow global economic recovery characterised by continued volatility, but affirmed the company’s short and medium-term economic targets. The company is still focused on realising $4.5bn-6.0bn of proceeds from non-core business divestments by the end of 2015, he added.
“As 2014 unfolds, our actions to generate margin improvement will gain further momentum - evidenced again by our sixth consecutive quarter of year-over-year earnings growth. All of our key investments remain on track - especially Sadara and our PDH [propane dehydrogenation] unit in Texas - and are expected to deliver increased earnings beginning in 2015,” Liveris said.