Dow Chemical Co. Earnings: Margins Shrink as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Dow Chemical Co. (NYSE:DOW) reported its results for the first quarter. Dow Chemical produces chemicals, plastic materials, agricultural, advanced materials, and other products and services, including insurance.

Investing Insights: What’s the Future of Microsoft’s Stock?

Dow Chemical Earnings Cheat Sheet for the First Quarter

Results: Net income for the chemicals-diversified fell to $497 million (35 cents per share) vs. $710 million (54 cents per share) a year earlier. This is a decline of 30% from the year-earlier quarter.

Revenue: Fell 0.1% to $14.72 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Dow Chemical Co. reported adjusted net income of 61 cents per share. By that measure, the company beat the mean estimate of 59 cents per share. Analysts were expecting revenue of $15.01 billion.

Quoting Management: Andrew N. Liveris, Dow’s chairman and chief executive officer, stated, “Dow again demonstrated the strength of its transformed portfolio, even as demand remained slow early in the quarter. … The benefit of our balanced portfolio was again evident: We captured demand gains in developed regions – particularly in the U.S. and Germany – and posted a tenth consecutive quarter of volume increases in rapidly growing emerging economies.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 17.8%.

Gross margin went down 1.2 percentage points to 16.5%. The change appeared to be caused by costs, which went up 1.4% from the year-earlier quarter, while revenue fell 0.1%.

The company’s net income has fallen for two quarters in a row. In the fourth quarter of the last fiscal year, net income fell 87.3% from the year-earlier quarter.

The company trumped estimates last quarter after falling shy in the two quarters prior. In the fourth quarter of the last fiscal year, it missed the mark by 7 cents, and in the third quarter of the last fiscal year, it came in under estimates by 2 cents.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 84 cents per share to 77 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has moved down from $2.81 a share to $2.69 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

The Procter & Gamble Company Third Quarter Earnings Sneak Peek>>

Apple Pounds Critics into Applesauce>>

Gold & Silver: Ben Bernanke Overshadows FOMC Minutes>>