Feb. 2 (Bloomberg) -- Dow Chemical Co., the largest U.S. chemical maker, posted an unexpected fourth-quarter loss after sales at its plastics unit fell.
The net loss was $20 million, or 2 cents a share, compared with net income of $426 million, or 37 cents, a year earlier, Midland, Michigan-based Dow said today in a statement. The average of five analysts’ estimates compiled by Bloomberg was for net income of 32 cents a share. Revenue rose to $14.1 billion from $13.8 billion.
Chief Executive Officer Andrew Liveris is expanding plastics production and developing genetically modified seeds and herbicides to compete with Monsanto Co.’s Roundup Ready product line. Profit from plastics, Dow’s biggest unit, tumbled 29 percent as raw-material costs rose and prices for resins such as polyethylene fell on slack demand.
“There is nothing good happening in the polyethylene market,” Mark Connelly, a New York-based analyst at Credit Agricole Securities USA Inc. who rates the shares “underperform,” said yesterday in a phone interview. “The China business slowed down dramatically.”
Dow rose 1.3 percent to $33.94 in New York yesterday. The shares have dropped 6.7 percent in the past 12 months.
Dow and Saudi Arabian Oil Co. said in July they will proceed with a $20 billion plan to build factories that make petrochemicals from low-cost oil and gas derivatives at the Saudi port of Jubail. Dow plans to expand production of plastics ingredients ethylene and propylene in Texas and Louisiana, including construction of an ethane cracker, its first U.S. ethylene plant since 1995.
Dow, founded in 1897 as a bleach maker, is the world’s biggest producer of chlorine, epoxy resins and linear low- density polyethylene plastic. It’s the second-biggest chemical maker by revenue behind Germany’s BASF SE.
(Dow will hold a conference call to discuss results at 9 a.m. New York time, which can be accessed at LIVE <GO> or on the company’s website at www.dow.com.)
--Editors: Simon Casey, Steven Frank
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