Dow Chemical Profit Beats Estimates on Consumer Focus

Industries Reuters

(Dow)

Seeds and chemical maker Dow Chemical reported a better-than-expected quarterly adjusted profit, helped by its focus on consumer markets such as agriculture and automotive, and a move to take full control of its Dow Corning venture.

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Excluding the Dow Corning transaction, Dow's sales rose 2.5 percent to $11.75 billion in the fourth quarter ended Dec. 31, with sales increasing in four of its five businesses.

"We are seeing early signs of positive economic momentum, with the United States in expansionary mode, driven by the ongoing strength of the consumer and the tailwind of a new incoming administration promising structural reforms," Chief Executive Andrew Liveris said in a statement.

Liveris was appointed by U.S. President Donald Trump to lead a private-sector group on manufacturing that will advise the U.S. secretary of commerce.

Dow Corning, previously a joint venture between Dow and Gorilla glass maker Corning Inc, makes silicone that are used in the manufacturing a host of products.

Dow, which is merging with DuPont, has continued to benefit from its strategy to focus on consumer markets by divesting billions of dollars of volatile, commodity assets over the years, including the $5 billion divestiture of most of its chlorine business.

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Net loss attributable to Dow's shareholders was $33 million, or 3 cents per share, in the fourth quarter, compared with a profit of $3.53 billion, or $2.94 per share, a year earlier.

Excluding a one-time $1.1 billion charge, reflecting a change in the way the it accounts for legal costs associated with defending against asbestos claims, Dow's operating profit rose 6.5 percent to 99 cents per share.

That was higher than analysts' average estimate of 88 cents, according to Thomson Reuters I/B/E/S.

The company's net sales, including the Dow Corning deal, rose to $13.02 billion from $11.46 billion, beating analysts' average estimate of $12.38 billion.

The $130 billion merger between Dow and DuPont has drawn scrutiny from regulators, particularly in the European Union, with concerns stemming from the overlap in the two chemical companies' seeds and crop protection businesses.

DuPont said on Tuesday that the merger, announced in December 2015, may not close in the first quarter as planned and will now likely close in the first half of the year.

"We are highly confident in the transaction," Howard Ungerleider, Dow's chief financial officer, told Reuters, adding that company was working with key regulators around the world.

(Reporting by Swetha Gopinath and Arathy S Nair in Bengaluru; Editing by Savio D'Souza)