Dow earnings show continued shift away from commodities, but a PE outage's impact on volume drives shares down


Dow Chemical's efforts in 2008 to park its basic plastics business in a joint venture with Kuwait's Petrochemical Industries Company (PIC) may have ultimately failed, but its subsequent $18.8 billion deal to acquire Rohm and Haas that same year, and create a specialty chemicals and advanced materials company, is already paying dividends and reinforcing the company's bid to move out of commodities and into specialty products. In its second quarter earnings release, Dow announced that nearly three-quarters of its EBITDA (earnings before income taxes, depreciation, and amortization) came from the newly combined Performance businesses, which include the former Rohm and Haas units. The Electronic and Specialty Materials segment of that business saw its EBITDA increase by $125 million versus last year.

For the quarter, Dow reported earnings of $0.50 per share, compared to a reported loss of $0.47 per share in the second quarter of 2009. Sales were up 20% year over year, with prices 19% higher and volume expanding by 7%. Sales rose in all business segments and geographic areas, with particular strength in North America, Europe, and the Middle East and Africa (EMEA). Dow reported that emerging geographies collectively posted volume gains that were nearly double that of the total company. Prices rose the most in North America and EMEA, climbing in those regions by 20% and 21%, respectively. ...
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