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(Reuters) - Dow Chemical Co reported a better-than-expected quarterly profit as its focus on high-margin businesses that cater to packaging and electronics industries helped balance the impact of a strong dollar.
Dow's shares were up 1.4 percent at $50.73 in early trading.
"Our ability to show earnings growth in this environment is the portfolio rebalancing that we have done over the last many years," Chief Executive Andrew Liveris told Reuters.
Dow, which has been shedding its low-margin commodity businesses, said in March it would sell parts of its century-old chlorine business to Olin Corp for $5 billion, helping it exceed its target of raising $7-$8.5 billion from divestures.
The company, however, has not agreed to activist investor Dan Loeb's demand to spin off its low-margin petrochemical businesses, arguing that keeping its units together helps save costs.
Dow averted a proxy battle with Loeb by agreeing to add four independent directors to its board last November.
Dow said first-quarter sales fell nearly 15 percent to $12.37 billion due to the strong dollar and fall in oil prices. Analysts on average had expected $13.04 billion.
The decline in global crude prices has decreased Dow's competitive advantage by reducing the cost difference between natural gas-derived ethane, its key raw material, and oil-derived naphtha, used by its European and Asia rivals.
Rival DuPont also reported lower-than-expected sales on Tuesday and said it expects full-year operating earnings to be at the low end of its forecast due to a strong dollar.
"(Dow has been) showing more organic growth than DuPont is in recent quarters," SunTrust Robinson Humphrey analyst James Sheehan said.
Five out of six Dow units reported higher margins in the first quarter ended March 31. The only exception was the agriculture business.
Margins at the company's performance plastics unit, its biggest by sales, rose 5.6 percentage points.
The business, which accounts for more than a third of the company's sales, is benefiting from low prices for raw materials.
Net income available to Dow shareholders shot up 45 percent to $1.39 billion, or $1.18 per share. Operating profit was 84 cents per share, above the analysts' average estimate of 76 cents.
Dow's stock, which closed at $50.02 on Wednesday, has risen 10 percent this year. The S&P 500 Diversified Chemicals index has inched up 2 percent.
Reporting by Swetha Gopinath and Kanika Sikka in Bengaluru; Editing by Don Sebastian