Dow Profit Jumps Despite Sales Decline

MIDLAND — Dow Chemical Co. (NYSE: DOW) reported net income of $3.12 billion or $2.61 a share in the second quarter ended June 30, up from $1.14 billion or 97 cents a share a year earlier. Revenue was $11.95 billion, down from $12.91 billion a year earlier.

The company said $2.20 a share of the increase stemmed from the restructuring of the ownership of subsidiary Dow Corning, partically offset by a 27-cent-per-share charge for costs associated with a restructuring plan announced during the quarter.

Excluding “certain items,” net income for the quarter was $1.08 billion, up from $1.06 billion a year earlier. Operating earnings were 95 cents a share for the quarter, up from 91 cents a share a year earlier. Items excluded were restructuring charges, the impact of the Dow Corning ownership restructure, acquisitions, divestitures and a tax adjustment.

The company said its 7 percent sales decline was primarily driven by lower hydrocarbons and raw material prices and the impact from the Dow Chlorine Products divestiture.


Sales volume grew 2 percent on a reported basis and 4 percent excluding the impact of divestitures and acquisitions, reflecting broad-based, consumer-driven demand with gains across all geographic areas – Asia Pacific (up 7 percent); Europe, Middle East, Africa and India (EMEAI) (up 4 percent); Latin America (up 4 percent); and North America (up 3 percent). Regional highlights included Greater China (up 7 percent), Europe (up 6 percent) and the United States (up 4 percent).

“Dow’s relentless and disciplined execution once again delivered another quarter of operating earnings growth and margin expansion – marking our 15th quarter in a row – through a variety of challenging geopolitical and market conditions, and outpacing our peers,” Dow chairman and CEO Andrew N. Liveris said.

Agricultural Sciences reported second quarter sales of $1.6 billion, down from $1.7 billion in the year-ago period. Sales were impacted by low crop commodity prices, high industry inventories and currency headwinds. Equity losses for the segment were $11 million in the quarter.

Consumer Solutions delivered second quarter sales of $1.3 billion, up from $1.1 billion in the year-ago period, primarily on the addition of the Consumer Solutions – Silicones business. Equity earnings for the segment were $18 million, compared to $19 million in the year-ago period.

Infrastructure Solutions reported second quarter sales of $2.1 billion, up from $2 billion in the year-ago period as a result of the addition of the Infrastructure Solutions – Silicones business which more than offset lower pricing in all other businesses. Equity earnings for the segment were $45 million, up from $35 million in the year-ago period.

Performance Materials & Chemicals reported second quarter sales of $2.3 billion, down from $3.2 billion in the year-ago period, reflecting the impact of the split-off of Dow Chlorine Products and pricing declines. Equity losses for the segment were $12 million, down from equity earnings of $122 million in the same quarter last year, on Sadara start-up costs as well as reduced earnings from the Kuwait joint ventures due to the change in ownership of the MEGlobal joint venture and lower monoethylene glycol prices.

Performance Plastics reported second quarter sales of $4.7 billion, down from $4.8 billion in the year-ago period as volume gains in all businesses and geographies were more than offset by pricing headwinds, primarily in Hydrocarbons. Equity earnings for the segment were $45 million, down from equity earnings of $101 million in the same quarter last year, primarily due to Sadara start-up costs and a lower contribution from EQUATE.

For a replay of a conference call discussing these results, visit  http://www.dow.com.

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