July 27 (Bloomberg) -- Dow Chemical Co., the largest U.S. chemical maker, reported second-quarter profit that exceeded analysts’ estimates, led by gains in basic chemicals and plastics.
Net income rose to $1.07 billion, or 84 cents a share, from $651 million, or 50 cents, a year earlier, Midland, Michigan- based Dow said today in a statement. Earnings excluding costs for early debt repayment were 85 cents a share, topping the 79- cent average estimate of 12 analysts in a Bloomberg survey. Revenue climbed 18 percent to $16 billion from $13.6 billion.
Chief Executive Officer Andrew Liveris is expanding in Saudi Arabia and on the U.S. Gulf Coast to turn low-cost natural gas into chemicals used in food packaging and auto parts. Profit in the basic plastics and chemicals units rose, defying the expectations of those who expected Chinese demand to weaken, said Hassan Ahmed, an analyst at Alembic Global Advisors.
“The boogeyman just isn’t there,” Ahmed, who rates Dow shares “overweight,” said in a telephone interview yesterday from New York.
Dow fell 14 cents to $35.85 yesterday in New York Stock Exchange composite trading. The shares gained 5 percent this year before today.
Excluding divestitures, Dow increased product prices 19 percent from the year-earlier quarter and sales volumes gained 9 percent.
“We see growth continuing to gain traction in developed markets, albeit at a somewhat uneven and jagged pace given persistently high unemployment in the U.S. and sovereign debt concerns in Europe,” Liveris said in the statement.
“In fast-growing emerging geographies, despite some inflationary pressures, the rapid expansion of the middle class continues to drive robust underlying fundamentals,” he said.
Dow, founded in 1897 as a bleach maker, is the world’s biggest producer of chlorine, epoxy resins and polyethylene plastic. It’s the world’s second-biggest chemical maker behind Germany’s BASF SE.
--Editors: Steven Frank, Simon Casey
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