Dow Chemical Profit Rises Despite Sales Decline

MIDLAND — Dow Chemical Co. reported third quarter net income of $1.29 billion or $1.09 a share, up from $852 million or 71 cents a share in the third quarter of 2014.

Revenue was $12.04 billion, down 16 percent from $14.45 billion a year earlier.

The company reported gains in sales volume of 2 percent. The revenue decline was driven by lower prices charged for products and currency translation issues caused by the strong U.S. dollar.

Volume increases were shared by most operating segments, led by performance plastics, up 5 percent, and infrastructure and customer solutions both up 2 percent.

Among global regions, volume growth was led by a 7 percent increase in the Asia-Pacific region, Europe-Middle East-Africa-India, up 3 percent, and North America, up 1 percent.

Earnings before interest, taxes, depreciation and amortization rose to $2.9 billion for the quarter.

“Our entire organization continues to demonstrate the discipline and agility needed to deliver consistent earnings and margin growth as well as strong cash flow,” said Dow chairman and CEO Andrew N. Liveris. “Our investment in innovative products and technologies is driving margin expansion in challenging economic environments.”

The company also reported “adjusted” net income that exlcuded some items of $959 million, up from $860 million a year earlier. Those items included a gain of $621 million from the sale of AgroFresh, Dow’s post-harvest specialty chemical business, and $51 million in charges related to divestitures.

Cash provided by operations was $2.5 billion for the quarter, up more than $700 million, or 41 percent, vs. the same period last year.

Through the third quarter, Dow returned nearly $2 billion in
declared dividends and share repurchases. The company
announced the completed sale of Dow Chlorine Products on
Oct. 5, resulting in an additional $1.5 billion of common share buybacks, bringing the total cash returned to shareholders to $3.5 billion year to date.

Agricultural Sciences reported third quarter sales of $1.2
billion, down from $1.4 billion in the year-ago period. Sales
were impacted by lower crop commodity prices in Latin
America, high inventories and the strong U.S. dollar. Operating EBITDA for the segment was a loss of $39 million,
compared with a loss of $15 million in the year-ago period,
reflecting a decline in price, as well as lost EBITDA from the
sale of AgroFresh, which was partially offset by a gain of $44
million from the one-time sale of a joint venture.

Consumer Solutions reported third quarter sales of $1.1
billion, down from $1.2 billion in the year-ago period. Higher
sales demand in the automotive and semiconductor market sectors was more than offset by the stronger U.S. dollar, as well as lower pricing in all businesses. Operating EBITDA for the segment was $289 million, up from $283 million in the year-ago period. This represents a quarterly record for the segment. Equity earnings for the segment were $14 million, down from $34 million in the same quarter last year.

Infrastructure Solutions reported third quarter sales of $1.9
billion, down from $2.2 billion in the year-ago period as
volume growth in most areas was more than offset by lower
prices in all businesses and currency headwinds. Operating EBITDA for the segment was $325 million, down from $343 million in the year-ago period, reflecting a decline in equity earnings that more than offset business EBITDA gains. Equity earnings for the segment were $25 million, down from $56 million in the same quarter last year.

Performance Materials & Chemicals reported third quarter
sales of $3.1 billion, down from $3.9 billion in the year-ago
period. Strong sales volume in Asia Pacific was more than
offset by global pricing pressures in nearly all businesses and
the strong U.S. dollar. Operating EBITDA for the segment was $540 million, down from $596 million in the year-ago period – reflecting the impact of divestitures and lower monoethylene glycol pricing, which impacted equity earnings.
Equity earnings for the segment were $54 million, down from
$80 million in the same quarter last year.

Performance Plastics reported third quarter sales of $4.7
billion, down from $5.7 billion in the year-ago period. Volume
gains in all geographic areas were more than offset by lower
pricing in all businesses and geographic areas, in addition to
the strong U.S. dollar. The segment reported sales volume expansion across all businesses. Equity earnings for the segment were $50 million, down from $64 million in the same quarter last year.

More at http://www.dow.com.

For the nine months, net income wsa $3.82 billion or $3.24 a share, up from $2.7 billion or $2.24 a share a year earlier. Revenue for the nine months was $37.32 billion, down from $43.78 billion.

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