It was something of a wild and wooly quarter for Dow Chemical (NYSE: DOW), what with a significant acquisition and a few divestitures. But in the end, despite the soggy economy, it probably couldn't have been a more successful period for the company.
Oh sure, there was the reported loss of $0.47 per share in the quarter, a flip-flop from last year's earnings of $0.81. But if you back out certain items in the quarter, and give effect to some discontinued operations, Dow actually managed to check in with earnings of $0.05 -- not bad for a company involved in something approaching a complete overhaul.
So, while the results didn't match those of DuPont (NYSE: DD), neither was DuPont put through its paces like Dow. Indeed, Mr. Market was so enthralled by Dow's results that he pushed the company's share price more than 6% higher on the day.
Dow CEO Andrew Liveris noted that during the quarter the company had announced a number of "significant transformational milestones." Included were completion of several announced divestitures and improving the company's balance sheet, which had become weighty with the need to borrow the funds necessary to complete the Rohm and Haas acquisition.
Looking at the company's individual segments, it's not surprising that all of the units suffered sales declines year-over-year. In fact, the Basic Chemicals unit saw its sales decline by 53% from the second quarter of 2008, only to flatten out as compared to the first quarter of 2009. Beyond that -- and more importantly -- several of the segments improved on a sequential basis, including Coatings and Infrastructure, Performance Systems, Basic Plastics, and Performance Products.
The economy has been difficult on the chemicals industry, with the likes of Eastman (NYSE: EMN), along with H.B. Fuller (NYSE: FUL), Celanese (NYSE: CE), and FMC (NYSE: FMC), all suffering year-over-year earnings declines. Nevertheless, Dow joined the chorus of companies calling an economic bottom: "The economic outlook for the rest of 2009 appears to be stabilizing with strong growth in Asia Pacific, especially China, where domestic stimulus programs have created demand. In our view, the United States economy has found bottom ..."
Beyond that, I'm frankly impressed by the steps that Liveris has taken in assimilating the Rohm and Haas acquisition, improving the company's balance sheet, and strengthening most of its operating units. Having observed this progress, I'd urge my Foolish friends to keep an especially close eye on Dow Chemical.
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