Reuters — Dow Chemical, which is merging with DuPont, reported strong fourth-quarter results and gave an upbeat forecast for the current quarter as its focus on consumer markets benefits from improving economic growth worldwide.
The seeds and chemical maker said improving growth in the United States, Latin American and Europe, besides steady Asia growth, would boost demand in its packaging, consumer care, electronics, automotive and agriculture businesses.
Dow’s shares rose as much as 2.38 per cent to a record high of $61.64 on Thursday (all figures US$).
“We are seeing early signs of positive economic momentum, with the United States in expansionary mode, driven by the ongoing strength of the consumer and the tailwind of a new incoming administration promising structural reforms,” CEO Andrew Liveris said in a statement.
Liveris was appointed by U.S. President Donald Trump to lead a private-sector group on manufacturing that will advise the U.S. secretary of commerce.
Dow has been targeting cost savings of $3 billion after its merger with DuPont, but jobs cuts would be needed to help meet that target, Liveris said on a post-earnings call.
“We don’t fit the presidential agenda right away,” he said, referring to Trump’s call to create more U.S. jobs. Liveris, however, expects the Trump administration “to move fast on taking out regulatory costs and give us better tax regimens.”
Dow and DuPont’s $130 billion deal, announced in December 2015, has drawn regulatory scrutiny, particularly in the European Union. The main concerns stem from an overlap in their seeds and crop protection businesses.
Liveris said the companies were confident of addressing the EU’s concerns about crop innovation.
The deal is now expected to close in the first half of 2017, compared with their previous expectation of a first-quarter close.
Dow forecast first-quarter revenue of $12.25 billion to $13.25 billion, higher than analysts’ average estimate of $11.77 billion, according to Thomson Reuters I/B/E/S.
Dow’s move to take full control of its Dow Corning venture, a silicone business that was previously a joint venture with Gorilla glass maker Corning, and its focus on consumer markets helped boost its results in the fourth quarter.
Dow swung to a net loss due to a one-time $1.1 billion charge, reflecting a change in the way the it accounts for legal costs associated with defending against asbestos claims.
But, its operating profit of 99 cents per share sailed past analysts’ average estimate of 88 cents.
Net sales rose nearly 14 per cent to $13.02 billion, also trumping expectations of $12.38 billion.
— Reporting for Reuters by Swetha Gopinath and Arathy S Nair in Bangalore.