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Dow Chemical posts 11 percent drop in 4Q profit on higher costs

Dow Chemical posts 11 percent drop in 4Q profit on higher costs

Dow Chemical Co. said Thursday that its fourth-quarter profit declined 11 percent as higher costs offset a modest rise in sales by the world's second-largest chemical company.
Net income fell to $975 million (euro751.27 million), or $1 (euro.77) per share, in the last three months of 2006 from $1.1 billion (euro0.85 billion), or $1.12 (euro.86) per share, in the year-ago period.
The recent quarter was hurt by a charge of $85 million (euro65.5 million) for a fine imposed by the European Commission related to a rubber price-fixing scandal, as well as a $12 million (euro9.25 million) restructuring charge.
But Andrew Liveris, Dow's chairman and chief executive, said the results reflect the Midland-based company's long-term growth strategy.
"This was another very strong quarter for Dow, ending a tremendous year for the company ... our second highest year for earnings and a year that demonstrated the true value of our strategy to drive earnings growth and consistency," Liveris said in a statement.
Excluding certain items, earnings totaled 98 cents _ better than Wall Street predicted _ versus $1.02 (euro.79) per share a year ago. Sales edged up 3 percent to $12.24 billion (euro9.43 billion) from $11.92 billion (euro9.18 billion) a year earlier.
Analysts surveyed by Thomson Financial expected Dow to earn 93 cents per share on $12.12 billion (euro9.34 billion) in revenue.
Selling, general and administrative expenses jumped 16 percent to $453 million (euro349.05 million), while sales costs and research and development expenses were also higher.
For all of 2006, Dow reported net income was down nearly 18 percent to $3.72 billion (euro2.87 billion), or $3.82 (euro2.94) per share, from $4.52 billion (euro3.48 billion), or $4.62 (euro3.56) per share in 2005. Excluding items in both periods, earnings per share were $4.25 (euro3.27) in 2006, down from $4.37 (euro3.37) in 2005.
Sales were $49.1 billion (euro37.83 billion) in 2006, up 6 percent from 2005's record $46.3 billion (euro35.68 billion).
Volume rose 2 percent in the fourth quarter, led by growth in Dow's performance chemicals and plastics segments offset declines in its basic chemicals and energy businesses.
By region, the company saw strong demand for its products in Asia, Europe and Latin America, which tempered a slowdown in North America.
Dow said feedstock and energy costs are trending lower in 2007, and expects to see healthy demand and "solid results" in the year ahead.
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