Dow Chemical Co
The temporary closing of three plants overshadowed higher sales across all businesses and regions and hurt profit by 7 cents per share and revenue by $300 million, Dow said.
The plants -- one in Argentina and two in Texas -- had been operating at low levels during the recession and extra time was needed to ramp up production, a slow process, the company said.
The factory in Argentina, Dow's largest polyethylene plant in Latin America, was closed for 30 days, roughly a third of the quarter.
These outages were primarily in higher-margin geographies, Alembic Global Advisors analyst Charles Neivert told Reuters. I don't think consensus was full factoring them in.
(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 hold assets from the legacy Rohm & Haas and has two reporting units, saw sales jump 13.6 percent to $2.73 billion.
Dow hopes to boost annual sales at the unit, which makes parts for solar panels, televisions and Apple Inc's
Yet the units' performance should have been better, as higher costs, lower margins and increased competition continue to squeeze Dow's traditional cash cow, its basic chemicals and plastics businesses, Dahlman Rose & Co analyst Charles Neivert said
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.
Dow Chief Executive Officer Andrew Liveris said his view of the U.S. economy remains guardedly optimistic.
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, earnings were 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 tepid 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.
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 the unit off 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, saw sales rise 25 percent.
Dow cut its long-term debt, much of which came from the Rohm & Haas buyout, 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.
Dow announced a licensing deal during the quarter with Monsanto Co
Also during the quarter, Dow shareholders rejected a say-on-pay proposal, despite having approved a similar measure last year.
Shares of the company fell 7.9 percent to $26.09 in early trading on the New York Stock Exchange. 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)