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Dow Chemical Q4 misses Street view

Last updated: 09:29 02 Feb 2012 EST, First published: 10:29 02 Feb 2012 EST

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The Dow Chemical Company (NYSE:DOW) reported its fourth quarter results on Thursday, including earnings that missed analysts' estimates, due largely to certain one-time charges.

For the three months ended December 31, the chemicals maker reported a net loss of $20 million, or $0.02 loss per share,
compared to earnings of $426 million, or $0.37 per share, a year ago.

Adjusted for one-time items, like a $77 million charge for asset impairments related to Dow's Polyurethanes business, a $60 million charge related a warranty accrual adjustments, and a $42 million pretax loss related to the sale of a contract
manufacturing business, earnings were $289 million, or $0.25 per share.

According to Thomson Reuters, analysts had expected 30-cents per share in earnings.

Sales for the period, however, rose little more than two percent to $14.1 billion, though still missing analysts' $14.19 billion expectation.

Dow Chemical's CEO Andrew N. Liveris said: "Dow saw deterioration in the macro environment mid-quarter and, in line with our stated commitments, we purposefully intervened.

"In the midst of uncertainty and significant destocking across customer supply chains, we maintained our focus on financial discipline and operating efficiency – evidenced by our tight management of working capital, focus on improving operating rates and significant cash flow generation.

"We derived strong benefit from our geographic footprint – delivering broad-based top-line gains and achieving record sales for both the quarter and the year in emerging regions, balancing considerable weakness in Western Europe.

"In addition, our significant US market and feedstock advantage positioned us for success in the quarter and will continue to provide substantial value moving forward."

Indeed, sales in North America rose less than two percent to $4.88 billion, while revenues from the Europe, Middle East, and Africa (EMEA) region declined 1.3 percent to $4.64 billion. In the Asia Pacific region, revenues increased six percent to $2.67 billion, while increasing eight percent in Latin America, to $1.91 billion.

Sales under the company's electronic and functional materials business were essentially flat at $1.06 billion for the quarter, as a three percent decline in volume was offset by a three percent hike in price.

The coatings and infrastructure solutions segment posted a one percent increase in revenues, to $1.56 billion as a six percent hike in price offset a five percent decline in volume.

Meanwhile, a one percent rise in volume and a four percent increase in price led to a five percent hike in sales under the
agricultural sciences business to $1.34 billion. Similarly, a three percent increase in volume and an 11 percent increase in
price drove a 13.6 percent rise in feedstock and energy sales, to $2.85 billion during the quarter.

Performance materials and plastics reported a 4.3 percent increase in sales to $3.55 billion and a 5.7 percent decrease in sales to $3.66 billion, respectively. In materials, flat volume gain in Asia Pacific and EMEA was offset by declines in Latin American and North America. Volume and price rose three percent and two percent respectively, driving growth in performance plastics.

"Times like these demand a focused approach and strong resolve, and Dow’s firm operating discipline, cost control and productivity will continue throughout 2012," continued Liveris.

"This, together with our broad geographic footprint, balanced and integrated portfolio of businesses, technology-rich innovation engine and world-class feedstock advantage, will enable us to continue to deliver shareholder value.

"We will continue to closely monitor global economic trends and expect challenges in Western Europe to persist in the near term.

"We do not anticipate material improvements in market conditions for the first quarter of the year, but do project economic recovery will gain momentum as we move through the second quarter and the remainder of the year."

For the full year 2012, Dow posted adjusted earnings of $2.96 billion, or $2.54 per share, up 31 percent, while revenues rose 12 percent to $59.99 billion.

In New York, shares of the Midland, Michigan-based company fell 1.24 percent to $33.52, as of 9:53 am EDT. In the full year calendar 2011, the company's stock shed 15.76 percent.

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