Dow Chemical earnings fall but beat expectations

NEW YORK (Reuters) - Dow Chemical Co (DOW.N) on Tuesday reported a drop in quarterly profit that was not as steep as analysts had expected as growth overseas helped offset weak U.S. housing and auto markets as well as spiraling energy and raw material costs.

The largest U.S. chemical maker said it anticipates some economic uncertainty in the United States this year but expects continued sales growth in developing markets.

Excluding special items, fourth-quarter earnings fell to 84 cents a share from 98 cents a year earlier but exceeded Wall Street estimates of 80 cents.

The slowdown in the U.S housing and auto markets hurt volume in North America but this was offset by price increases, strong earnings from joint ventures and volume gains in Latin America, Europe and the Asia-Pacific region.

Quarterly revenue rose 16 percent to $14.23 billion. Analysts on average had forecast $13.21 billion, according to Reuters Estimates.

"At a segment level I was particularly happy to see the top line," HSBC analyst Hassan Ahmed said. "Depending on the sector or the segment that you look at, you see 6 percent to 31 percent sales growth."

Dow is looking to expand its more profitable specialty chemicals business while increasing its commodity chemicals operation through a series of joint ventures.

RESTRUCTURING CHARGES WEIGH

Quarterly net income fell 52 percent, to $472 million, or 49 cents a share, from $975 million, or $1 a share, a year earlier.

The results included restructuring charges of $590 million. Last month, Dow announced it would shut some plants and eliminate about 1,000 jobs to cut costs and direct capital toward businesses with better growth prospects.

The company also reduced its provision for income taxes by $113 million because of a change in the legal ownership structure of a joint venture.

Dow's specialty chemicals and plastics business was hurt by the steep run-up in crude oil costs during the fourth quarter coupled with the effect of the weak North American housing and auto markets, at which many of its products are directed.

In contrast, Dow's basic chemicals business posted a sharp increase in earnings before interest and taxes, spurred by strong demand for caustic soda from the paper and alumina industries along with strong pricing for ethylene glycol used in making polyester and containers.

The company's joint ventures also boosted the bottom line, with strong results. Dow is using joint ventures to make its earnings more consistent and less cyclical.

Shares of the company were up 22 cents at $37.81 in afternoon trade on the New York Stock Exchange.

MIXED OUTLOOK