Dow Chemical, the largest US chemical maker, reported third-quarter profit that rose 51% on sales of agriculture products and caustic soda. Net income increased to $900 million, or 69 cents a share, from $597 million, or 45 cents, a year earlier, Midland-based Dow said Thursday. Earnings excluding a onetime gain at a plastics venture were 62 cents a share, trailing the 63-cent average of 16 estimates compiled by Bloomberg News, the first earnings miss in five quarters. Revenue climbed 17% to $15.1 billion from $12.9 billion. CEO Andrew Liveris is expanding in Saudi Arabia and on the U.S. Gulf Coast to turn oil and low-cost natural gas into chemicals used in food packaging and auto parts. The unit that makes caustic soda surged 71% on higher prices. The agricultural sciences unit was boosted by demand from Latin America.
“Five of the six businesses had a great quarter,” Paul Leming, a New York-based Ticonderoga Securities analyst who rates the shares “buy,” said Thursday. The plastics unit disappointed, he said. The plastics business remained Dow’s most profitable in the quarter, even as earnings dropped 17% to $748 million because of higher ethylene production costs and lower demand in developed markets. Dow rose 8.2% to $29.10 in New York. Dow shares fell 38% in the third quarter, a sign that investors expected earnings to plummet, Hassan Ahmed, a New York-based analyst at Alembic Global Advisors who rates Dow “buy,” said Thursday in a phone interview. “The market was expecting a blood,bath, which we really didn’t see,” Ahmed said.
“Headwinds in developed regions continue to restrain consumer spending and business investment,” Liveris said in the statement. “However, in emerging regions, growth in the middle class continues to drive demand, particularly as it pertains to infrastructure and urbanization.” Excluding divestitures, Dow increased product prices 17% from the year-earlier quarter, and sales volumes were unchanged. Price gains outpaced $1.7 billion of higher costs for raw materials and energy, Dow said.