US Dow Chemical’s Q4 net income down 24% to $734m, sales flat

(adds information from paragraph 5 on Dow’s divisions Q4 performance and full year results)

LONDON (ICIS)–Dow Chemical reported fourth-quarter net income at $734m, down 24% year on year, while sales stood flat at $14.4bn, the US chemical major said on Thursday.

Despite the fall in net income, Dow’s adjusted earnings per share (EPS) rose during the fourth quarter to $0.85, up from the EPS distributed in the same three-month period of 2013 at $0.65.

The company’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) during the fourth quarter of 2014 stood at $2.4bn, 15% higher than in the fourth quarter of 2013.

“Dow achieved a record end to a strong year, with another quarter of year-over-year operating EPS, EBITDA and EBITDA margin growth. This is nine quarters in a row of these metrics increasing year over year,” said Andrew Liveris, Dow’s CEO.

“Our operating model of integration with geographic and market diversification showed its superiority during volatile commodity environments, as evidenced by demand growth in most segments,” he added.

Dow’s divisions had a mixed performance during the fourth quarter of 2014.

Agricultural Sciences reported sales of $1.9bn during the quarter, up 5% year on year, on the back of higher sales in all geographies, especially in Latin America. Sales at the Crop Protection subdivision rose 3% during the fourth quarter of 2014 year on year, with higher sales in herbicides, insecticides and fungicides. Sales of new crop protection products, on the other hand, jumped 23% compared to the same quarter of 2013. Seeds also registered growth, up 9% year on year.

The Agricultural Sciences division reported fourth-quarter EBITDA at $222m, up 40% compared to the same quarter in 2013.

Consumer Solutions’ Q4 sales stood at $1.1bn, flat year on year as “double-digit sales gains in North America were offset by sales declines in other geographic areas,” said the company. Both Dow Automotive Systems and Dow Electronic Materials reported gains, although those at the latter were more than offset by declines in Display Technologies as a result of lower sales in films and filters and organic light-emitting diodes (OLED) materials, said Dow.

Adjusted EBITDA at Consumer Solutionswas $243m, up 15% compared to the same quarter in 2013, supported by strong volumes and cost discipline, which were able to offset price declines.

The Infrastructure Solutions division reported fourth-quarter sales of $2bn, down 4% year on year, driven by declines in the regions of Europe, Middle East, Africa & India (EMEAI). Within the division there were bright spots, however, with Energy & Water Solutions reporting sales gains in all regions due to strong demand in reverse osmosis and microbial control technologies.

However, the growth observed in that subdivision was “more than offset by long acrylate monomer market conditions and weak western Europe construction related demand in Dow Building & Construction and Dow Coating Materials,” said the company.

Infrastructure Solutions’ adjusted EBITDA was $244m, up $31m versus the same quarter last year, as a result of productivity actions and demand growth in attractive markets.

Performance Materials & Chemicals registered sales of $3.9bn during the fourth quarter, up 5% compared to the fourth quarter of 2013, with gains observed in all geographic areas.

Within this division, polyurethanes managed to achieve a double-digit growth in sales. “Collectively, these sales gains more than offset declines in Industrial Solutions from fewer projects in concentrated solar power applications, as well as decreased de-icing sales due to warmer weather,” said Dow.

Performance Materials & Chemicals’ EBITDA stood at $636m, versus $483m during the fourth quarter of 2013, thanks to improved market dynamics coupled with ongoing productivity actions, said Dow.

Finally, Performance Plastics Q4 sales stood at $5.5bn, down 3% compared to the fourth quarter of 2013. The reason for the fall, said Dow, has to be found in the declines in Hydrocarbons and Energy, whose sales increased in North America and Latin America, although those gains were offset declines in Asia Pacific and EMEAI.

Dow Packaging and Specialty Plastics sales were flat during the fourth quarter of 2014 on the back of an unfavourable exchange rate, said the firm, although firmer pricing in Dow Elastomers and Dow Electrical and Telecommunications, together with growth in transportation, consumer durables and infrastructure could offset volume declines, as the supply conditions remained tight.

The division’s EBITDA stood at $1.2bn in the fourth quarter, a sharp fall from the $1.7bn reported in the same three-month period of 2013.

On a full-year basis, Dow Chemical’s earnings stood lower than in 2013, with net income falling sharply from $4.45bn to $3.43bn, despite sales growing from $57.1bn to $58.2bn.

For the year 2014, adjusted earnings per share (EPS) to be distributed to shareholders stood at $3.11, an increase of more than 25% compared to the $2.48 distributed in the year 2013.

“Against the backdrop of ongoing macroeconomic, currency and energy market uncertainty, we continue to see positive underlying demand fundamentals. Our advantaged global cost positions are enabling us to increase asset utilization, while selling into higher value sectors. Tightening supply and demand is acting to offset some of the challenges that are a result of falling oil prices,” said CEO Liveris.