Dow Chemical profit beats Street, but sales miss
(Reuters) - Solid sales of herbicides and other agricultural products helped Dow Chemical Co's first-quarter profit beat Wall Street's expectations, but lower-than-expected revenue pushed shares down more than 3 percent in premarket trading.
Dow's chemicals and other products are used to make plastics, computers, clothing and many other consumer goods. The company's results are often seen as a key barometer of global economic health.
The largest U.S. chemical maker by sales said the U.S. economy is improving, helped by shale-derived natural gas, and that China would continue to be an attractive growth market.
But parts of Europe remain in "recessionary conditions," the company said on Thursday. Volume rose in Europe only because of a propylene supply agreement Dow has with Braskem SA for that continent after the Brazilian company bought Dow's polypropylene business last year.
"We anticipate that global growth will gain momentum as we move through the second quarter and into the remainder of the year," Chief Executive Andrew Liveris said in a statement on Wednesday.
For the quarter ended March 31, the company posted net income of $412 million, or 35 cents per share, compared with $625 million, or 54 cents per share, in the year-ago period.
Excluding restructuring charges and other one-time items, the company earned 61 cents a share.
By that measure, analysts had expected earnings of 59 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell less than 1 percent to $14.72 billion. Analysts had projected revenue of $15.01 billion.
Shares fell 3.3 percent to $34.89 in premarket trading after closing at $36.08 on Wednesday. The stock has traded between $20.61 and $42.23 in the past 52 weeks.
A strong start to the North American planting season helped Dow sell more herbicides, pesticides and other agricultural products. Sales jumped 14 percent.
The company is awaiting U.S. approval for its Enlist biotech corn, which is engineered to withstand liberal dousings of a Dow-developed herbicide.
The government is taking public comments on the new product through Friday, and if approved, Enlist would give Dow a potent weapon to fight rivals DuPont and Monsanto.
Sales of Dow's performance plastics dropped 11 percent largely due to weak margins in Europe and Asia. Dow uses crude oil-derived naphtha in those regions to make some plastics, and high oil prices have harmed profit.
In North America, by contrast, Dow uses shale-derived natural gas to make some plastics, and the cheap price of natural gas has boosted regional margins.
Sales of de-icing fluids and other performance material products from Dow fell 2 percent, partly due to a warm North American winter.
(Reporting By Ernest Scheyder; Editing by John Picinich, Dave Zimmerman)