Positive Adjectives Abound at Dow

Dow Chemical (NYSE: DOW  ) reported its fourth-quarter and full-year 2007 results on Tuesday, and though its net income for the quarter fell by one-half, there's no need to break out in a cold sweat:

  • Fourth-quarter GAAP-based net income fell to $0.49 per share. Part of that was higher raw materials costs, but it was mostly because of a $582 million restructuring charge.
  • For the year, Dow reported earnings of $2.99 per share ($3.76 per share excluding special items) on a record $53.5 billion in sales.
  • Emerging markets, which constitute 28% of Dow's revenues, aided growth -- sales in Greater China were up 24%, and sales in Eastern Europe increased 30%.

Out, damn'd spot!
In a conference call laced with quasi-Shakespearean tone and rosy adjectives, Dow CEO Andrew Liveris went on to speak highly of the company's growth opportunities abroad, where it does roughly two-thirds of its business, as well as its mission to pursue "financial fitness" and strategic acquisitions.

One thing Liveris should be proud of is the company's recent deal with Kuwait Petroleum, where it took in $9.5 billion in cash in exchange for the bulk of its plastic assets. The venture should, among other things, help Dow acquire cheaper feedstock and other resources, and help it stay on pace with competitors the likes of DuPont (NYSE: DD  ) and BASF.

Given the rising costs and the recessionary concerns in the second half of 2007, it wasn't a terrible quarter for Dow, but it wasn't a blockbuster, either. Income-minded investors, however, should be pleased with the company's increased dividend, which now yields 4.4%. Going forward, investors should keep an eye on Dow's acquisition activities and its progress toward renewing earnings growth.


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