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Last Update: 24-Oct-12 08:59 ET
Dow Chemical shares rise by 5% following better than expected earnings
Dow Chemical (DOW $30.24 +1.69) reported thrid quarter earnings of $0.42 per share, $0.04 better than the Capital IQ consensus of $0.38; revenues fell 9.7% year/year to $13.64 billion versus the $14.22 bln consensus. Volume declined 1%, or rose 2% on an adjusted basis. Volume was up in all geographic areas on the same basis, and increases were reported in Agricultural Sciences (up 7%), Performance Plastics (up 5%), Performance Materials (up 4%), and Coatings and Infrastructure Solutions (up 1%). (-) Price declined 9%, with double-digit decreases in most businesses. Price was down in all geographic areas, led by Europe and Greater China, which declined 12% and 11%, respectively on an adjusted basis. Purchased feedstock and energy costs decreased by $1.2 billion versus the same quarter last year. (-) The company's operating rate was 83% for the quarter, flat versus the year-ago period and up 5 percentage points versus the prior quarter.
The comapny also announced a restructuring program designed to accelerate cost reduction actions and advance the next stage of the Company's transformation in the midst of persistently slow macroeconomic growth. These actions will result in a net reduction of approximately 2,400 positions, or five percent of the global workforce. The restructuring also includes the shutdown of approximately 20 manufacturing facilities. Once fully implemented, these actions are expected to result in approximately $500 million of annual operating cost savings by the end of 2014. The Company will take charges totaling approximately $0.50 - $0.60 per share in the fourth quarter of 2012 for asset impairments and write-offs, severance and other costs related to these measures. In addition, Dow will further reduce capital spending and investments for targeted growth programs that are no longer a priority in this environment. These measures are expected to deliver an additional $500 million cash impact. Taken together with the $1.5 billion of measures Dow has already initiated, this will bring the Company's stated cumulative intervention goal to $2.5 billion.
The comapny also announced a restructuring program designed to accelerate cost reduction actions and advance the next stage of the Company's transformation in the midst of persistently slow macroeconomic growth. These actions will result in a net reduction of approximately 2,400 positions, or five percent of the global workforce. The restructuring also includes the shutdown of approximately 20 manufacturing facilities. Once fully implemented, these actions are expected to result in approximately $500 million of annual operating cost savings by the end of 2014. The Company will take charges totaling approximately $0.50 - $0.60 per share in the fourth quarter of 2012 for asset impairments and write-offs, severance and other costs related to these measures. In addition, Dow will further reduce capital spending and investments for targeted growth programs that are no longer a priority in this environment. These measures are expected to deliver an additional $500 million cash impact. Taken together with the $1.5 billion of measures Dow has already initiated, this will bring the Company's stated cumulative intervention goal to $2.5 billion.
