Dow Agro reports flat quarterly sales, smaller profit

October 22, 2014

Dow AgroSciences reported stagnant sales in the third quarter Wednesday morning on softer sales of crop-protection products.

The sales of $1.4 billion were flat compared with the same period of 2013, the company said.

Dow Agro said earnings before interest, taxes, depreciation, and amortization, or EBITDA, were $5 million, down from $18 million in last year's third quarter.

Spending on growth initiatives and soft market conditions for crop-protection products pulled down earnings, the company said.

Dow Agro is a unit of Midland, Michigan-based Dow Chemical Co., the country's largest chemical maker.

The parent company posted third-quarter earnings Wednesday that beat analysts’ estimates as plastics margins widened on higher prices and lower raw material costs.

Profit excluding some items was 72 cents a share, Dow said Wednesday, exceeding the 67 cent average of 18 estimates compiled by Bloomberg. Revenue rose 4.9 percent, to $14.4 billion, topping the $14.3 billion average estimate.

Dow CEO Andrew Liveris, under pressure from activist investor Third Point LLC to improve results, is selling lower-margin units while pushing ahead with expansions in the U.S. and Saudi Arabia. Profit from plastics, Dow’s largest business, rose 31 percent to a record on higher prices for products such as polyethylene and lower costs for raw materials ethane and naphtha.

Third Point, the hedge fund founded by Daniel Loeb, said in January that Dow should spin off its petrochemical assets to improve profitability. In response, Liveris has defended Dow’s integrated structure, in which commodity chemicals such as ethylene and propylene provide ingredients for higher-value products in agriculture, electronics and automotive plastics.

In May, Third Point applauded Dow’s tripling of a share repurchase program to $4.5 billion and the expansion of a plan to sell underperforming assets. Dow said Oct. 2 that by the year-end it expects to have agreed on the sale of three units for proceeds of more than $2 billion.

Dow is expanding in petrochemicals: next year it plans to begin production at a new propylene plant in Texas and the first phase of a joint venture with Saudi Arabian Oil Co. An ethylene plant in Texas is scheduled to start up in 2017.


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