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Dow Chemical Profit Falls 20% on Lower Licensing Revenue

Diversified chemical maker Dow Chemical said Thursday its first-quarter profit fell 20% from a year-ago period that included significant licensing revenue within its performance plastics segment.

For the three months ended March 31, net income after paying preferred dividends dipped to $973 million, or $1 a share, from $1.21 billion, or $1.24 a share, a year ago.

Sales grew 3% to $12.43 billion from $12.02 billion last year, as double-digit sales growth in Europe, Asia Pacific and Latin America more than offset continued weakness in North America, particularly in the housing and automotive sectors.

On average, analysts surveyed by Thomson Financial were looking for profit of $1 a share on revenue of $12.01 billion.

Volume was up 1% in the quarter, with solid gains across most businesses. Asia Pacific, Latin America and Europe all reported strong demand growth -- with volume increases of 13%, 8% and 7%, respectively -- more than offsetting an 8% decline in North America.

Prices edged 2% higher, with healthy gains across most of the company's performance businesses and in basic plastics, dampened by lower prices in basic chemicals.

Early in the quarter, Dow said it benefited from a temporary lull in the rising cost of materials and energy, relieving some margin pressure.

"While there was a temporary pause in feedstock and energy cost increases at the start of the year, we saw a sharp change in direction mid-way through the quarter and expect second-quarter costs to be higher than the same period last year," said Andrew N. Liveris, Dow's chairman and chief executive. "That said, strong demand and good pricing momentum has continued through April -- reinforcing our view that 2007 will be another solid year for the company."

Dow Chemical said it expects solid global demand to continue through 2007, although North America will likely be slower than in 2006.

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