Dow Chemical Swings Back To Profit

Midland-based Dow Chemical Co. Tuesday reported net income of $651 million or 50 cents a share in the second quarter, vs. a loss of $332 million or 47 cents a share in the second quarter of 2009.

Adjusted earnings, which exclude $13 million in restructuring charges, $37 million in integration costs for the acquisition of Rohm and Haas Co., a gain of $51 million for the divestiture of Styron and other items, were 54 cents a share in the second quarter. Adjusted earnings a year earlier were 5 cents a share. Those earnings exclude a one-time charge of $209 million for the inventories acquired with Rohm and Haas, $86 million in transaction fees for the Rohm and Haas acquisition, restructuring charges of $662 million and other items.

Sales rose 20 percent vs. the same period last year to $13.62 billion from $11.32 billion. Excluding acquisitions and divestitures, sales rose 26 percent, driven by price increases of 19 percent and volume growth of 7 percent. Sales were up in all operating segments and in all geographic areas, with particular strength in North America and Europe, Middle East and Africa.

Dow said it generated more than $600 million in free cash flow in the quarter and reduced debt by $1.9 billion.

For the six moths, net income was $1.2 billion or 91 cents a share, vs. a loss of $320 million or 47 cents a share for the first half of 2009. Sales for the six months were $27 billion, up from $20.36 billion in the first half of 2009.

Said chairman and CEO Andrew N. Liveris: "Dow continued its earnings growth trajectory in the second quarter, with double-digit sales gains, continued progress in growth synergies and above-target structural cost reductions driving higher results. Strong demand growth in North America and Europe, combined with continuing demand momentum in emerging economies, drove revenue improvements across all of our operating segments. The power of our new portfolio was clearly evident, with the combined Performance businesses delivering nearly three-quarters of our... results. Over these last 15 months, we have seamlessly integrated Rohm and Haas, launched our Advanced Materials Division and continue to make progress on our strategic agenda -- the latest example being the signed definitive agreement for our new chlor-alkali joint venture. This bolsters Dow's integration strength for our downstream performance businesses at a lower cost and with less capital outlays. We also completed the divestment of Styron and have now exceeded our goal of divesting $5 billion in non-strategic assets in less than two years. With the proceeds of these divestments and positive operating cash flows, we made further meaningful progress in strengthening our balance sheet. These actions, coupled with our performance over this last quarter, clearly demonstrate that our strategy is on course and continues to deliver results."

Liveris said the company's economic view "remains guardedly optimistic. We see continued demand growth from business spending improvements and a slow return of the consumer. In other industrialized regions, monetary stimulus continues to provide support against headwinds, such as tighter fiscal policies, particularly in Europe. And in emerging economies, we expect growth to continue, although at a tempered pace."

For a replay of the conference call discussing the results, visit www.dow.com.