Dow Chemical Co.'s (DOW) second-quarter earnings rose 73% as
higher prices and emerging markets boosted revenue growth, masking
higher commodity costs.
The largest U.S. chemical producer by revenue has now posted
nine consecutive quarters of margin growth as it places greater
emphasis on specialty chemicals and materials, which yield bigger
margins than commodity chemicals. In recent months, Dow has
increased its supply of ethylene and has said it plans to further
integrate shale gas liquids into its North American businesses. The
company, which makes chemicals used in a wide range of items from
diapers to auto industry products, has shown an improvement in
earnings lately due to stronger demand and price increases.
Earlier this week, Dow announced plans to build and operate a
$20 billion Saudi Arabian chemicals complex in partnership with
Saudi Arabian Oil Co., a move that would create one of the world's
largest integrated chemical facilities.
"The performance of our diverse and balanced portfolio once
again overcame continuing headwinds in certain sectors," Chairman
and Chief Executive Andrew Liveris said.
Dow reported a profit of $982 million, or 84 cents a share, up
from $566 million, or 50 cents a share, a year earlier. Excluding a
loss on early extinguishment of debt and other items, earnings were
up at 85 cents from 54 cents.
Revenue climbed 18% to $16.05 billion, driven by price gains.
Excluding divestitures, sales were up 28%.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 81 cents on revenue of $14.74 billion.
Gross margin edged up to 15.5% from 15%.
Volume increased 9% overall. Health and sciences division sales
posted growth of 18% while electronic and specialty materials had a
13% sales increase. Prices were up 19%.
The two largest segments by revenue, plastics and performance
products, reported sales growth of 24% and 15%, respectively. Sales
in emerging markets were up 14% excluding divestitures, with sales
in Asia Pacific up 23% excluding divestitures.
Shares were up 1.28% to $36.31 in premarket trading. The stock
has climbed 31% over the past 12 months.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287;
nathalie.tadena@dowjones.com