Dow Chemical Beats Estimates on Strong Sales; Updates Merger Plans

  Seeds, plastics and diversified chemical producer Dow Chemical Co. (NYSE: DOW –  $63.19) reported a much bigger quarterly profit from a year earlier, when the company recorded charges of $824 million. For the first quarter Dow brought in adjusted earnings per share of $1.04 vs. a consensus estimate of $0.99. Net sales rose 23.6% to $13.23 billion in the latest quarter, a little better than the view of $13.21 billion and well above the $10.7 billion a year ago. Midland, Michigan-based Dow’s packaging, consumer care, electronics and automotive businesses have seen robust demand due to improving economic growth worldwide. The company has been concentrating on these high-margin businesses while shedding its less-lucrative commodity units, including parts of its century-old chlorine business. Dow said sales rose in four of its five businesses, falling only in its agriculture unit.

       Dow and DuPont updated investors of their proposed merger transaction, which is expected to close in August. The companies achieved key regulatory approvals; reiterated their commitment to the $3 billion cost synergy target; and mutually agreed that all the intended spin-offs will occur within 18 months of closing. The post-merger Materials Science Company will be the first spin-off, if it would not adversely impact the value of the other intended spin-off transactions. The shares, yielding 2.9%, can be retained in a well-diversified income portfolio.

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