Dow Chemical Co
The temporary closing of three plants overshadowed higher sales across all businesses and regions, cutting profit by 7 cents per share and revenue by $300 million.
The plants, one in Argentina and two in Texas, had been operating at low levels during the recession and Dow needed extra time to ramp up production, it said.
The Argentina factory, Dow's largest polyethylene plant in Latin America, was closed for 30 days, roughly a third of the quarter. It also had a water supply problem, Chief Executive Andrew Liveris said on a call with investors.
These outages were primarily in higher-margin geographies, Alembic Global Advisors analyst Charles Neivert said. I don't think consensus was full factoring them in.
Liveris told investors the plant outages did not bleed into the third quarter and that there will be no major outages the rest of the year.
He also said that his view of the U.S. economy remains guardedly optimistic.
(For a graphic of Dow Chemical's earnings, click here: http://link.reuters.com/nyv92n)
In a positive sign, Dow said its advanced materials business, which holds assets from the legacy Rohm & Haas and has two financial reporting units, reported a 13.6 percent increase in sales to $2.73 billion.
Dow hopes to boost annual sales at the unit, which makes parts for solar panels, televisions and Apple Inc's
The units' performance needs to be better, Dahlman Rose & Co analyst Charles Neivert said, since higher costs, lower margins and increased competition continue to squeeze Dow's traditional cash cow, its basic chemicals and plastics businesses.
They need to continue to improve their performance businesses at a faster rate, because we know the basic plastics business is coming under pressure going into the second half of the year, Neivert said.
Elsewhere on Tuesday, Dow rival Westlake Chemical Corp's
BY THE NUMBERS
Dow reported net income of $566 million, or 50 cents per share, compared with a year-earlier loss of $486 million, or 47 cents per share.
Excluding one-time items, Dow earned 54 cents per share. By that measure, analysts expected 56 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 20.3 percent to $13.62 billion. Analysts expected $13.69 billion.
Dow cited bad weather in North America and Europe for lower-than-expected results in its agricultural business, where operating income rose 40 percent.
The last month of the quarter was much worse than normal because the season ended so fast, Dahlman Rose's Neivert said. The earnings are a bit of a disappointment.
On the conference call, executives said demand for agricultural chemicals remains strong.
As in the first quarter, Dow's basic plastics unit posted strong results, with sales up 26.2 percent. The unit's products go into a wide range of consumer goods, including diapers.
Dow has been trying to spin off the unit into a joint venture as part of its asset-light strategy to focus more on high-margin specialty chemicals.
The basic chemicals unit, which makes chlorine, one of the most mass-produced chemicals in the world, posted a 25 percent increase in sales.
Dow cut its long-term debt, much of which came from the Rohm & Haas acquisition, by 5.5 percent to $18.11 billion.
Earnings from joint ventures, including the Dow Corning business with Corning Inc
During the period Dow sold its Styron basic plastics unit to a private equity firm.
Last month the Midland, Michigan-based company said it would become a global sponsor of the Olympics, a move it hopes will boost its standing with the public and net more than a $1 billion in revenue over the next 10 years.
Also on Tuesday, Dow and Saudi Aramco said they would locate a long-planned joint venture project in Jubail, on the Persian Gulf coast. The move was widely expected.
Shares of the company fell $2.63, or 9.3 percent, to $25.70. The stock has traded between $19.75 and $32.05 in the past 52 weeks.
(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn, Dave Zimmerman, Robert MacMillan, Steve Orlofsky and Bernard Orr)