Dow Chemical Earnings: Vanilla

Dow Chemical (DOW) reported earnings yesterday, and the results were as expected.

• Sales for Q4 set a new Company record, rising 16 percent from the same period last year to $14.2 billion.
• Earnings for the quarter were $0.49 per share. Excluding certain items, earnings for the quarter were $0.84 per share. Earnings in the fourth quarter of 2006 were $1.00 per share. Excluding certain items, earnings for that quarter were $0.98 per share.
• Compared with the same quarter of 2006, price increased 12 percent, with gains in all operating segments and geographic areas.
• Volume was up 4 percent compared with the fourth quarter of last year, with improvements in all operating segments and in every geographic area outside of North America. Asia Pacific recorded volume gains of 10 percent, and Europe 6 percent.
• Purchased feedstock and energy costs climbed $1.7 billion compared with the fourth quarter of last year, the largest year-over-year increase in the Company's history.
• Equity earnings increased 21 percent year-over-year, totaling $294 million for the quarter.

2007 Full-Year Highlights

• 2007 sales increased 9 percent compared with 2006, setting a new record for the Company of $53.5 billion.
• Dow reported full-year earnings of $2.99 per share. Excluding certain items, earnings for the year were $3.76 per share. Earnings for 2006 were $3.82 per share. Excluding certain items, earnings for 2006 were $4.25 per share.
• Equity earnings rose 17 percent compared with 2006, to $1.1 billion, exceeding $1 billion for the first time in the Company's history.

CEO Andrew Liveris said:

This was a good quarter ... a quarter in which our entire organization responded with speed and discipline to an unprecedented run-up in feedstock and energy costs, raising price to mitigate much of the $1.7 billion year over year increase. And our focus on price did not come at the expense of volume. Volume gains were reported in all operating segments, a testament to our price/volume management capabilities.

2007 is in the books and 2008 is what we need to focus on now. All things considered, with the explosion of oil prices in 2008, management did an outstanding job not letting costs destroy the year. Liveris called 2007 a "transformational year" and so far as the structure of the company goes, it was. 2008 needs to be the "transformational year" for putting the plan into action and delivering on the bottom line.

Disclosure ("none" means no position): Long Dow