GRAND RAPIDS, Mich.--Dow Chemical Co. (DOW)reported a 6% increase in third-quarter profits as price increases passed on to customers offset a nearly 50% jump in its raw materials and energy costs.
Adjusted for one-time items such as hurricane-damage expenses, Dow beat Wall Street profit estimates.
Midland-based Dow reported earnings of $428 million, or 46 cents per share, in the three months that ended Sept. 30, up from $403 million, or 42 cents per share, a year ago.
Excluding cleanup and repairs at Gulf Coast operations from Hurricanes Gustav and Ike, research and development costs and acquisition-related expenses, its profit was 60 cents per share.
Analysts polled by Thomson Reuters expected, on average, earnings of 57 cents per share. Analyst estimates typically exclude one-time items.
Shares rose 2.8 percent, or 64 cents, to $23.20 in premarket trading.
Sales rose 13 percent to $15.4 billion, edging estimates averaging $15.6 billion. Its Agricultural Sciences division set a new third-quarter sales record of $976 million, a 24 percent jump.
"Dow performed well in the third quarter despite a difficult economy and increased costs," Andrew N. Liveris, chairman and chief executive, said in a written statement released by the company. "Our ability to take proactive measures, including the implementation of two broad-based price increases and aggressive cost controls, allowed us to post solid results against worsening market conditions, record-high raw material costs and two hurricanes on the U.S. Gulf Coast."
Costs for raw materials and energy surged 48%, or $2.6 billion more than the same quarter in 2007. It was the largest year-over-year increase in company history and the third consecutive quarter in which these costs hit record highs, Dow said.
For the first nine months of the year, Dow earned $2.1 billion, or $2.26 per share, compared with $2.4 billion, or $2.49 per share, during the same period last year.
While "a global recession through most of 2009" is likely, Liveris said, the company is "well positioned" to weather the economic downturn.
Dow reaffirmed that it was moving forward on two recently announced initiatives: a joint venture with Petrochemical Industries Co., a subsidiary of state-owned Kuwait Petroleum Corp., and its $15 billion acquisition of competitor Rohm and Haas Co.
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