Dow Chemical Profit Tops Estimates as Oil Helps Plastics

Where Does the Dow Chemical, DuPont Merger Stand?
  • CEO Liveris says lower energy costs are a `net benefit'
  • Plastics business had record earnings in fourth quarter

Dow Chemical Co., which agreed in December to a historic merger with DuPont Co., reported better-than-expected fourth-quarter earnings after its plastics business gained from the drop in oil prices.

Profit excluding some items was 93 cents, Midland, Michigan-based Dow said in a statement Tuesday, exceeding the 69-cent average estimate of 19 analysts surveyed by Bloomberg. Sales fell to $11.5 billion from $14.4 billion, exceeding the $11.2 billion average estimate. Dow shares rose 5 percent to $44.70 at 7:09 a.m. before the start of regular trading in New York.

Profit from Dow’s plastics business, its largest unit, was a fourth-quarter record as it paid less for the oil it used as a raw material. Chairman and Chief Executive Officer Andrew Liveris said in the statement that lower energy prices are a “net benefit” and will help Dow overcome “negative investment sentiment in other sectors.”

“Costs fell faster than prices,” Hassan Ahmed, an analyst at Alembic Global Advisors, who recommends buying Dow shares, said Monday in a telephone interview. “Polyethylene demand was far better than expected, particularly in North America.”

Chairman and Chief Executive Officer Andrew Liveris agreed to merge with DuPont in the biggest chemical deal ever, combining the two largest U.S. chemical makers. The merger will create a trio of businesses focused on commodity chemicals, agricultural products and specialty materials. The agriculture business will be the world’s largest, surpassing Monsanto Co. and Syngenta AG in size.

Dow also said Dec. 11 it will buy Corning Inc.’s stake in their 72-year-old silicone joint venture, Dow Corning Corp.

Dan Loeb, the activist investor who runs Third Point, Dow’s seventh-biggest shareholder, wrote Dow’s board on Dec. 12 asking that Liveris have no role in DowDuPont. Loeb suggested the deal was rushed to beat the expiration of a standstill agreement that had prevented Third Point from publicly criticizing Liveris during the prior year.

In 2014, Loeb accused Liveris of missing earnings goals and demanded a breakup of the company.

Dow also said Tuesday that net income climbed to $2.94 a share from 63 cents a year earlier.

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