Dow Chemical (NYSE:DOW) posted a weaker-than-expected 17% increase in third-quarter profits on Thursday as the chemical giant’s growth on the performance plastics front wasn’t enough to offset shrinking volumes.
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Wall Street expressed disappointment with the earnings and revenue miss from Dow, bidding its shares almost 4% lower in premarket trading.
Dow said it earned $679 million last quarter, compared with a profit of $582 million a year earlier. Per-share profits increased 49 cents from 42 cents thanks to preferred dividends.
Excluding one-time items, the company logged profits of 50 cents a share, trailing the Street’s view of 54 cents.
Revenue inched up 0.7% to $13.73 billion, missing consensus calls from analysts for $14 billion. Volumes slipped 2% last quarter, or 1% excluding the impact of divestitures. Prices rose 3% thanks to gains in most business lines, including a 9% jump in performance plastics.
"Dow continued to demonstrate positive momentum with our drive to execute self-help measures in a slow-growth world,” Dow CEO Andrew Liveris said in a statement.
Dow, which has been pruning its non-core assets, also said it is moving ahead with plans to unload more assets with a value of at least $3 billion to $4 billion.
Earlier this month, Dow sealed a $500 million deal to sell its global polypropylene licensing and catalysts business to W.R. Grace (NYSE:GRA).
“The proceeds of these divestitures will create further capacity for the company to generate returns to shareholders,” Liveris said. "Our cash priorities remain intact: rewarding our shareholders, reducing interest payments from our debt structure and funding organic growth."
In the third quarter, Dow generated $3.62 billion in performance plastics revenue, up from $3.50 billion the year before. On the other hand, feedstocks and energy revenue fell to $2.33 billion from $2.52 billion, while performance materials revenue slid to $3.31 billion from $3.41 billion.
Shares of Midland, Mich.-based Dow fell 3.75% to $39.50 in premarket trading on Thursday, putting them on track to reduce their 2013 rally of 27%.
Earlier this week, chemical giant DuPont (NYSE:DD) posted surging third-quarter profits that topped forecasts amid broad-based volume growth.