On April 26, Motley Fool Income Investor pick Dow Chemical (NYSE:DOW) released first-quarter earnings for the period ended March 31.

  • Revenue increased 3.4%, reflecting strong underlying volume and solid price increases across most businesses. But ...
  • ... EPS declined sharply (19.4%), with the primary driver being "a decline in licensing revenues from extremely high levels a year ago."
  • Double-digit sales improvements in Europe, Asia Pacific, and Latin America more than offset continued weakness in North America, particularly in the housing and automotive sectors.
  • Dow has an impressive four-star rating in Motley Fool CAPS, while fellow chemical giant BASF (NYSE:BF) boasts a five-star rank and one of the highest scores in CAPS.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$12,432.0

$12,020.0

3.4%

Net Profit

$973.0

$1,214.0

(19.9%)

EPS

$1.00

$1.24

(19.4%)

Diluted Shares

975.9

980.7

(0.5%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

14.7%

18.4%

(3.7)

Operating Margin

8.8%

12.8%

(4.0)

Net Margin

7.8%

10.1%

(2.3)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$2,565

$3,424

(25.1%)

Accounts Rec.

$8,775

$7,554

16.2%

Inventory

$6,106

$5,982

2.1%

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$5,402

$4,993

8.2%

Long-Term Debt

$7,975

$9,180

(13.1%)

The balance sheet reflects the company's health.

Cash Flow Highlights
Dow does not provide a cash flow statement in its earnings releases. Shame, since plenty of other companies do (hint hint, Dow).

Find out why free cash flow is a Fool's best friend.

Related Foolishness:

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