Dow Chemical profit beats as it shifts to high-margin products
By Swetha Gopinath and Kanika Sikka
(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. Continued...