Dow Chemical Results Top Expectations
Dow Chemical Co. (NYSE: DOW – $48.13), which has been selling off assets and streamlining its operations in the face of pressure from activist investor Daniel Loeb to split off its petrochemicals business, said its third quarter profit rose as sales thrived across almost all Dow’s operating segments. Sales grew in all the company’s geographical regions as well, helping the results beat analysts’ expectations. Dow said it posted an adjusted profit equal to or $0.72 a share, in the third quarter, up from an adjusted $0.50 a year earlier. Revenue rose 4.9% to $14.41 billion. Analysts were looking for $0.68 a share in earnings and $14.31 billion in revenue. Performance plastics, Dow’s biggest revenue driver, posted an 8.5% sales gain and performance materials sales rose 8%. Dow said that it expects to maintain strong results even as the global economic picture continues to look challenging thanks to its “low-cost positions” on several products world-wide. As previously reported here, Dow has completed $1.3 billion in divestments this year through the beginning of October, with the ultimate goal of divesting $6 billion in assets and businesses by 2015. Dow appears to be a good selection for year-ahead relative price performance and looking further out, the shares offer favorable, albeit speculative, total return potential, helped by a well-covered dividend yielding 3.1%.