* New agricultural products to drive growth: CEO
* First-quarter adj EPS 69 cents vs est 61 cents
* Costs, weak demand hits European plastics
* Shares up 6 pct
By Garima Goel
April 25 Dow Chemical Co posted a 33
percent jump in quarterly profit as farmers in the Americas
bought more of its seeds and pesticides, reinforcing a
sector-wide shift by chemical makers toward agriculture.
Dow Chemical, the largest U.S. chemical maker by sales,
forecast demand for its crop-protection products would drive
growth after a first quarter that beat Wall Street profit
forecast, sending its shares up 6 percent.
"Two-thirds of the increase in revenues and profit came from
new (agricultural science) products," Dow Chemical Chief
Executive Andrew Liveris told Reuters. "That will continue to
set records for us this year, and the next several years."
As the spring planting season in the northern hemisphere
moves into full swing, farmers in North America and beyond are
buying more seeds, pesticides and other chemicals to safeguard
crops from any repeat of last year's devastating drought.
Rival DuPont has also cut dependence on industrial
chemicals by pushing harder into the farm sector. Like Monsanto
, the world's No.1 seed company, it has reported strong
quarterly demand for drought-hardy seeds and crop chemicals.
Dow Chemical said its agriculture sciences business posted
the highest quarterly sales growth of the company's six units.
The 14 percent jump took the unit's quarterly sales above $2
billion for the first time, overshadowing lower demand for its
"Dow's ag(ricultural) business continues to punch above its
weight," Susquehanna Financial Group analyst Don Carson said.
Liveris told a post-earnings conference call that Dow
Chemical expected sales of new crop-protection products to
contribute $800 million to the company's revenue this year.
Beyond 2013, the company is awaiting regulatory approval to
launch a weed-resistant corn, called Enlist, which it says could
compete with Monsanto's Roundup Ready crop technology.
"That's a big deal for us, and you will see more of that
growth coming from agriculture -- bottom and top line, in that
order," Liveris said in a telephone interview.
Agricultural sciences and electronics -- which makes parts
for solar panels and smartphones -- were the only business units
to record revenue growth in the quarter.
Sales of performance plastics, still the company's biggest
business, fell 3 percent to $3.5 billion due to weak demand in
Europe and the closure of a polyethylene plant in Belgium.
"We are consolidating and closing assets, particularly in
European markets, where weak industry conditions persist,"
Liveris said on the conference call.
Dow Chemical's European plastics business has been adversely
affected by the high cost of the raw material naphtha, which is
derived from oil. In the United States, chemical companies have
improved their margins by using cheaper natural gas to produce
Midland, Michigan-based Dow Chemical said in March it plans
to build several factories on the U.S. Gulf Coast to utilize
shale gas to produce high-margin specialty plastics.
"They have significantly reduced operating rates in their
less-competitive, low-margin, oil-based operations in Europe,"
UBS Investment Research analyst John Roberts said. "They are
running full-out in the U.S., which is largely gas-based."
Dow Chemical also reiterated its plans to raise $1.5 billion
from asset sales in the next 18 months.
The company said net income rose to $550 million, or 46
cents per share, in the first quarter from $412 million, or 35
cents per share, a year earlier.
Excluding one-time items, earnings were 69 cents per share,
well ahead of the average analysts' estimate of 61 cents.
Dow Chemical's stock was worth $34.01 in afternoon trading
on the New York Stock Exchange.