Dow Chemical Co. (DOW) swung to a second-quarter loss after
accounting for the costs involved with purchasing rival chemical
maker Rohm & Haas, yet results excluding those charges showed a
surprise profit.
The company's shares dipped 1.3% premarket to $20 each as
revenue was well short of expectations. The stock had been up 26%
for the month through Wednesday and more than tripled since
mid-March.
Chairman and Chief Executive Andrew Liveris said the economic
outlook for the rest of the year "appears to be stabilizing," with
strong growth in the Asia Pacific region, and especially in China
"where domestic stimulus programs have created demand."
The U.S. economy, he said, "has found bottom, but will be slow
in recovering as unemployment continues to be a drag on consumer
spending."
The chemical sector, which is seen as an economic bellwether
because it makes parts used in most consumer products, continues to
reel as cutbacks in overall spending depress orders. Dow, which is
shifting its focus to high-tech, specialized materials from
low-margin commodity chemicals - has sold assets and announced
plant closings to cut costs after its $16.3 billion Rohm & Haas
purchase in April.
Dow's loss came to $344 million, or 47 cents a share, compared
with a year-earlier profit of $762 million, or 81 cents a share.
Excluding restructuring and other impact, Dow would have earned 5
cents in the latest quarter.
Revenue dropped 31% to $11.3 billion.
Analysts polled by Thomson Reuters most recently were looking
for an 8-cent loss on revenue of $13.02 billion.
Gross margin rose to 13.8% from 10.6%.
Volume and selling prices each dropped 20% on a pro-forma basis,
which excludes Rohm & Haas.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com;