High demand in key regions lifts Dow’s Q3 net income, sales

(Adds information on divisions’ performance from paragraph 5)

LONDON (ICIS)–Dow Chemical’s third-quarter income jumped 41% year on year to $964m as sales rose 5% to $14.4bn on the back of higher prices associated with high demand in key regions, the US chemicals major said on Wednesday.

Earnings before interest, taxes, depreciation and amortisation [EBITDA] rose 24% during the third quarter year on year to $2.27bn, driven by ‘ongoing productivity actions and improved market fundamentals’, while diluted earnings per share (EPS) stood at $0.71, up from $0.49 in the corresponding period of 2013.

“Our low-cost positions and geographic diversification enabled growth and improving operating rates in the quarter… This consistent execution against the plans we have firmly set… is enabling us to deliver increasing returns and maximize shareholder value creation. This remains our singular focus,” said Andrew Liveris, Dow’s CEO.

Liveris added that looking ahead Dow will take “targeted steps across our businesses to navigate through persistently slow and volatile global macroeconomic conditions” and aim to have a global scale allowing to best protect itself against volatile markets.

Dow’s Performance Plastics division reported sales in the third quarter of $3.9bn, up 8% compared with the same quarter in 2013. The division contributed to more than half of the company’s EBITDA during the third quarter of 2014 with $1.3bn, an increase of 31% year on year.

The strong improvement in Performance Plastics were driven by the Dow Packaging and Specialty Chemicals units, which benefited from growth in the food and specialty packaging markets as well as from hygiene, medical and pipe sectors.

Performance Materials registered sales of $3.6bn in the third quarter, up 8% compared to the same period of 2013, resulting in an EBITDA of $506m, up from $314m posted in the same quarter of 2013.

“Polyurethanes achieved double-digit revenue growth with higher sales in all geographic areas driven by gains in the consumer comfort, appliance and industrial market sectors. Sales rose in propylene oxide/propylene glycol to a new quarterly record due to strong operational performance, growth in key market sectors, as well as industry supply disruptions in both North America and EMEA [Europe, Middle East and Africa],” said the company.

Dow’s Coatings and Infrastructure Solutions business achieved sales of $1.8bn in the third quarter, flat compared with the same quarter of 2013, with EBITDA also practically flat at $289m.

The company attributed the division’s performance to declining sales in EMEA and Asia, which could not be offset by gains observed in North America and Latin America. Dow added that supply limitations of vinyl acetate monomer from plant outages had impacted the sales of the Performance Monomers subdivision.

Electronic and Functional Materials registered sales of $1.2bn during the period July-September, up 3% compared with the same months in 2013, and EBITDA at $320m, 11.5% higher year on year.

The Semiconductor Technologies subdivision enjoyed “continued strong foundry demand” although other subdivision’s, including Display Technologies suffered as a consequence of lower sales in films and filters and organic light-emitting diode (OLED) materials.

“Functional Materials drove sales increases in nearly all geographies, led by growth in North America. Double-digit gains in Dow Microbial Control and Dow Pharma and Food Solutions reflect strong growth fundamentals in the energy, water and pharmaceuticals market sectors,” said the company.

Feedstocks and Energy reported sales in the third quarter of $2.4bn, up 2% compared to the same period of 2013, on the back of higher prices in olefins and aromatics, although EBITDA did not manage to follow suit and decreased 2% in the third quarter year on year to $183m.

Agricultural Sciences, despite achieving in the third quarter sales of $1.4bn (flat year on year), could only manage EBITDA at $5m, down from the $18m reported in the third quarter of 2013, on the back of “softer market conditions in a seasonally weak quarter weighing down Crop Protection results, coupled with increased spending on growth initiatives,” the company said.

“Record EBITDA in Performance Plastics and Electronic and Functional Materials, coupled with significant improvement in Performance Materials again this quarter, demonstrates the value of our strategy to be low cost and fully integrated in key products while adding value through technology in key markets,” said Liveris.

Looking ahead, Dow’s CEO said the company will take advantage of its “low-cost positions in key products” such as ethylene and the company’s downstream activities and will aim to keep having a “global scale.”