The Wall Street Journal-20080130-Earnings Digest- Dow Chemical-s Net Falls Despite Sales Growth

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Earnings Digest: Dow Chemical's Net Falls Despite Sales Growth

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Dow Chemical Co.'s fourth-quarter net income fell 52%, despite expanding sales, as the company recorded $582 million in restructuring charges.

The chemical giant was able to weather lackluster U.S. demand and high oil prices by raising commodity chemical prices and increasing international sales.

Chief Executive Andrew Liveris said the company is in a good position to withstand the slowdown in the U.S. economy because two- thirds of its sales come from abroad.

"There's no question that the U.S. is slower inbound into 2008 . . . but we don't think [the slowdown] is recessionary or that anyone has caught cold from it," he said.

Dow shares edged up 35 cents to $37.94 in 4 p.m. composite trading on the New York Stock Exchange.

In past years, the company has tried to generate steadier earnings by reducing its dependence on low-margin commodity chemicals, which tend to suffer in economic downturns. It has been investing in specialty chemicals and shifting basic chemical production to regions with cheap raw materials through joint ventures with local partners.

Dow Chemical's sale of 50% of some of its commodity chemicals and plastics businesses to form a joint partnership with Kuwait Petroleum Corp. should close as expected before the end of the year, Mr. Liveris said. The proceeds, estimated to be $9.5 billion, will allow the company to continue its transformation through mergers and acquisitions or "a massive share buyback," he said.

Goldman, Sachs & Co. analyst Robert Koort called the performance essentially in line with expectations, considering a lower-than- anticipated corporate-tax rate for the quarter. He said in a research note that Dow Chemical's geographic and product diversification will be a key driver in 2008.

Other chemical companies, such as Monsanto Co. and DuPont Co., have continued to increase sales in recent quarters by focusing on overseas markets.