Dow Chemical Posts Profit on Higher Sales, Tax Ben
Midland, MI, Jan. 29--Dow Chemical Co. reported a profit for the fourth quarter, reversing a loss a year earlier, when merger expenses, a big asbestos charge and restructuring costs hurt the bottom line.
The maker of chemicals, plastics and agricultural products said Thursday that higher sales and tax benefits helped offset higher costs during the quarter.
Dow turned in net income of $929 million, or 99 cents a share, in contrast to a year-earlier net loss of $809 million, or 89 cents a share. Sales rose 20% to $8.33 billion from $6.96 billion.
Results for the latest quarter include tax benefits of $454 million, or 49 cents a share, related to foreign tax credits and "carryforwards," or operating losses carried forward from previous years.
The results for the fourth quarter of 2002 include merger-related expenses and restructuring costs of $147 million; a charge of $522 million to pay potential asbestos liabilities of Union Carbide Corp., which Dow acquired in 2001; $8 million for Dow's share of restructuring costs for DuPont Dow Elastomers LLC, a joint venture with DuPont Co. (DD); and a $40 million gain from the sale of the Oasis pipeline.
Dow said a 12% increase in prices and an 8% increase in volume helped make up for a 15% increase in costs for energy and feedstocks -- natural gas and crude oil used in the production of plastics and chemicals.
"Dow's results benefited from a strengthening global economy and, more importantly, from Dow's focus on price/volume management and productivity improvements," Chairman and Chief Executive William S. Stavropoulos said in a statement.
Volume growth was the strongest in a year, Mr. Stavropoulos said. Demand increased for materials for the electronics industry, industrial coatings and furniture, personal-care products, cleaning products, construction materials, and herbicides in Latin America.
For the full year, Dow reported net income of $1.73 billion, or $1.87 a share, in contrast to a net loss of $338 million, or 37 cents a share, for 2002. Sales rose 18% to $32.63 billion from $27.61 billion, and represented a record for the company.
Feedstock and energy costs soared 33% over 2002 levels, but Dow said effective management of pricing and volumes, along with cost reductions, more than offset the increase.
"Looking into 2004, we expect that strong global economic growth will improve chemical industry demand, tightening industry supply/demand balances," Mr. Stavropoulos said.
"However, there is still uncertainty due to feedstock and energy costs, which remain high and volatile," he added
