* First-qtr earnings per share $0.79 vs est. $0.71
* Sales $14.46 bln vs est. $14.72 bln
* Shares rise as much as 3.5 pct to $50.64
(Adds margin forecast, CEO comments)
By Swetha Gopinath and Kanika Sikka
April 23 Dow Chemical Co said it
expected margins to grow in almost all of its businesses in the
near term, after tight cost control helped it lift margins in
the first quarter.
The No. 1 U.S. chemical maker by sales reported a
higher-than-expected profit, sending its shares up as much as
3.5 percent on Wednesday.
The one unit not expected to boost margins is the feedstocks
and energy division, which Chief Executive Andrew Liveris said
may be restructured after the company completes a planned sale
of its chlorine and derivatives assets.
The feedstocks and energy unit is among petrochemical
businesses hedge fund titan Daniel Loeb is urging Dow to spin
Dow has put up its epoxy business and some chlorine and
derivatives assets for sale as part of a broad plan to raise as
much as $6 billion from non-core asset sales by the end of 2015.
The company has resisted the demand by Loeb's Third Point
LLC, saying repeatedly that it wants to use its commoditized raw
materials businesses to keep costs down in its high-growth
specialty chemicals businesses.
"(The company's divestment plan) is very shareholder
friendly, but when you throw on top of that our share buyback
and our dividend increase, that is clearly shareholder
friendly," Liveris told Reuters.
"Every shareholder including Loeb has to like those
Dow reaffirmed its plans to complete its $4.5 billion share
buyback program by year-end.
Dow, which has narrowed its focus to electronics, packaging
and agriculture, is looking to shed non-core businesses in its
functional materials and performance materials units - two of
the slowest-growing units in the latest quarter.
The company's share were up more than 1 percent at $49.48 in
afternoon trading on the New York Stock Exchange.
Dow said it expected margins to rise by as much as 4 percent
in its agriculture sciences, performance materials and
performance plastics businesses in the near term.
The company said margins expanded across most of its
businesses in the first quarter even after an increase of more
than $300 million in the cost of feedstock and energy.
"A lot of the (cost-saving) actions that were taken over the
last couple of years will be benefiting earnings this year and
next," said John Roberts, who leads U.S. chemical coverage at
UBS Investment Research.
Roberts said he thought most of the company's biggest
cost-cutting steps were behind it. Dow Chemical cut 5 percent of
its workforce and shuttered 20 plants in late 2012.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) in Dow's feedstocks and energy business
fell 28 percent.
Adjusted EBITDA in Dow's coatings and infrastructure
solutions business rose 20 percent in the quarter, while
performance plastics rose 5 percent.
The performance plastics unit, Dow's biggest, reported its
seventh straight quarter of margin expansion as higher prices
helped the company offset higher costs for raw materials such as
propane and ethane.
The company's first-quarter net income of 79 cents per share
beat average analyst estimate of 71 cents, according to Thomson
Revenue rose 0.5 percent to $14.46 billion, missing the
average analyst estimate of $14.72 billion.
(Reporting by Swetha Gopinath and Kanika Sikka in Bangalore;
Editing by Don Sebastian and Ted Kerr)