Dow profit beats on Asia demand and cost cuts, sees recovery in 2020
By Taru Jain and Arathy S Nair
(Reuters) - Dow Inc <DOW.N> beat Wall Street's estimates for quarterly profit and revenue on Wednesday, helped by growth in volumes in Asia as well as lower costs, and the chemicals maker pointed to a recovery in demand this year as trade tensions ease.
Dow's shares rose as much as 6% to $49.79 after the company said it cut about $35 million in costs in the fourth quarter and expects to reduce another $140 million in expenses this year.
The company's steps to trim costs after its spin off from DowDupont has helped it offset a drop in demand for chemicals used in plastics, building materials and paints, amid a global slowdown.
But lower prices for polyethylene, the main ingredient used in making most plastics, due to a supply glut have been a cause for concern. The company's overall prices declined 12% in the quarter.
"(2020 will see) not necessarily a snapback but improving demand as we go through the year just based on restocking to a normal demand pattern," Chief Financial Officer Howard Ungerleider said.
Volumes fell 2%, primarily due to planned maintenance in Europe that hit results at its hydrocarbon and energy unit, which sells by-products of oil refining.
However, Ungerleider said volumes grew at a double-digit rate in China as customers either maintained or bought additional inventory leading into the Chinese New Year.
Chief Executive Officer Jim Fitterling said the coronavirus outbreak was leading to a slight uptick in demand for materials used in household cleaners and surgical masks, adding that industrial materials maker Dupont was also seeing the same.
On Tuesday, 3M Co <MMM.N> said it was increasing production of respiratory protection products to match global demand from the outbreak.
Dow, spun off in April after chemical conglomerate DowDuPont split into three, posted operating earnings of 78 cents per share, excluding items, that beat analysts' lowered estimates of 74 cents, according to Refinitiv IBES data.
Net loss available to shareholders was $2.32 billion in the three months ended Dec. 31, compared with a profit of $891 million, primarily due to a $2.9 billion write-down on goodwill impairment and restructuring.
Net sales fell 14.6% to $10.2 billion, but beat estimates of $10.07 billion.
Dow forecast current-quarter revenue of $10 billion to $10.4 billion, below estimates of $10.76 billion.
DuPont, which makes chemicals used in the automotive and electronic industries, and Corteva <CVTA.N>, which makes pesticides and seeds, are set to post their quarterly reports on Thursday.
(Reporting by Taru Jain and Arathy S Nair in Bengaluru; Editing by Anil D'Silva)
