Dow Chemical Co. reported third-quarter earnings that beat analysts’ estimates as wider margins in European plastics more than made up for weak agriculture markets.
Net income rose to $1.09 a share from 71 cents a year earlier, Midland, Michigan-based Dow, the top U.S. chemical maker, said Thursday in a statement. Profit excluding some items was 82 cents, exceeding the 68-cent average of 19 estimates compiled by Bloomberg. Sales decreased 16 percent to $12 billion, trailing the $12.4 billion average estimate.
Chairman and Chief Executive Officer Andrew Liveris completed the sale of the chlorine business on Oct. 5 to focus on more-profitable businesses such as plastic packaging, seeds and pesticides. Margins from polyethylene and other plastics that comprise Dow’s largest business expanded as European factories benefited from lower prices for naphtha refined from crude oil.
“Polyethylene margins have held up quite well,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said Wednesday in a telephone interview.
The loss in the agriculture unit widened in the seasonally weak quarter. Bearish corn and soybean markets and a slumping Brazilian real have prompted DuPont Co., Monsanto Co. and FMC Corp. to forecast earnings below analysts’ estimates.
On Wednesday, Dow fell 0.4 percent to $47.48 in New York. The shares have climbed 4.1 percent this year.
The latest results come 11 months after the company avoided a proxy fight with Third Point LLC, the hedge fund founded by Dan Loeb. Two Third Point nominees joined the Dow board in January as part of a truce. The activist investor had accused Liveris of a series of “broken promises” and prepared to run a slate of nominees for the board.
Dow is counting on new projects being built in Saudi Arabia and the U.S. to boost earnings in the coming quarters. The Sadara joint venture with Saudi Arabian Oil Co. is scheduled to begin partial operation this year. Construction of a propane dehydrogenation unit in Freeport, Texas, was recently completed, and an ethylene unit at the same site is scheduled to start in 2017.