Dow Chemical earnings fall, but beat expectations

NEW YORK (Reuters) - Dow Chemical Co (DOW.N) on Tuesday reported a drop in quarterly profit that was not as steep as analysts had expected as growth overseas helped offset weak housing and auto markets and spiraling energy and raw material costs.

The largest U.S. chemical maker, whose shares rose more than 4 percent, said it saw some economic uncertainty in the United States this year, but expects continued sales growth in developing markets.

Excluding special items, fourth-quarter earnings fell to 84 cents a share from 98 cents a year earlier, but exceeded Wall Street estimates of 80 cents.

The slowdown in the U.S housing and auto markets hurt volume in North America, but this was offset by price increases, strong earnings from joint ventures, and volume gains in Latin America, Europe and the Asia-Pacific region.

Quarterly revenue rose 16 percent to $14.23 billion. Analysts on average had forecast $13.21 billion, according to Reuters Estimates.

"At a segment level I was particularly happy to see the top line," said HSBC analyst Hassan Ahmed. "Depending on the sector or the segment that you look at, you see 6 percent to 31 percent sales growth."

Midland, Michigan-based Dow is looking to expand its more profitable specialty chemicals business, while increasing its commodity chemicals operation through a series of joint ventures.

Quarterly net income fell 52 percent to $472 million, or 49 cents a share, from $975 million, or $1 a share, a year earlier.

The results included restructuring charges of $590 million. Last month, Dow announced it would shut some plants and eliminate about 1,000 jobs to cut costs and direct capital toward businesses with better growth prospects.

The company also reduced its provision for income taxes by $113 million because of a change in the legal ownership structure of a joint venture.

"For 2008, there is some uncertainty in the economic outlook for the United States," Chief Executive Andrew Liveris said in a statement.

But he said Dow's global reach would help the company increase sales in the developing markets of Brazil, Russia, India and China.

Dow is also focused on joint ventures to make earnings more consistent.

In a deal announced last month, Kuwait Petroleum Corp's Petrochemical Industries Co unit will pay Dow $9.5 billion to contribute five of its businesses, which are worth about $19 billion, to a 50-50 joint venture.

But the long-awaited deal has not excited investors. At Monday's close, Dow shares had fallen 16.5 percent over the last three months, compared with a 4.5 percent drop in the Standard & Poor's Chemical Index (.GSPPM).

The company's shares were up $1.66, or 4.4 percent, at $39.25 in morning New York Stock Exchange trade.