Dow Chemical Posts Bigger-Than-Expected Loss

Dow Chemical said Tuesday it lost $1.55 billion in the fourth quarter, due in large part to restructuring costs including its decision to slash 11 percent of its work force and a 23 percent drop in sales amid a global slump.

The loss was larger than expected and revenue came in below Wall Street expectations.

Dow Chemical shares , which are down 70% over the past six months, rose in reaction.

Andrew N. Liveris, Dow's chairman and chief executive, said while the economic recovery could be rapid this year, "we are planning for a global recession throughout 2009 and will continue to take actions on managing our cash and controlling our costs with the same intensity that we demonstrated in the fourth quarter."

In a recent interview with The Associated Press, Liveris raised the possibility of the chemical company's first-ever dividend cut, but there was no mention of such action being taken in his company's earnings report.

Dow, one of the world's largest chemical makers, said its loss amounted to $1.68 per share in the three months ended Dec. 31. It had earned $472 million, or 49 cents per share, during the last quarter of 2007.

The company reported $978 million in charges related to restructuring, the effect of two hurricanes on its Gulf of Mexico facilities, and expenses related to a failed joint venture and its planned acquisition of rival Rohm and Haas.

Excluding those one-time costs, its loss was 62 cents per share. A Thomson Reuters survey of analysts showed they expected a profit of 6 cents a share excluding one-time items.

Midland-based Dow said sales fell to $10.9 billion from $14.2 billion. Analysts had been looking for much higher revenue of $13.3 billion.

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"With a global economic crisis unfolding during the quarter, we responded with speed and urgency to get ahead of the demand destruction that continued to accelerate as we approached the end of the year," Liveris said.

"We immediately put in place a full array of aggressive cash generation and cost and capital control measures that delivered results," he added. "We remain intensely focused on those actions that we can control and will continue to do so throughout 2009."

It was a difficult year for Dow. First, the soaring price of commodities forced it to twice raise prices by more than 20 percent. Then commodity prices fell as the global economic slump deepened.

Since Dow struck a deal in July to acquire rival Rohm & Haas, the economy has deteriorated. It announced in early December that it was cutting 5,000 full-time jobs, closing 20 plants and selling several businesses to curb costs amid the economic recession.

The company said it expected the plan to save about $700 million per year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll.

Later in the month, a Kuwaiti company pulled out of a $17.4 billion venture that would have given Dow about $7 billion.

The Federal Trade Commission blessed the $15.4 billion Rohm & Haas deal last month, establishing a Jan. 27 deadline for the acquisition to close.

Dow didn't meet the deadline, postponing the buyout and leading Rohm & Haas to file a lawsuit, asking a Delaware court to force a closing.

Dow filed its response Tuesday, saying that a court-forced merger "under the present circumstances will cause irreparable harm to both Dow and Rohm and Haas." "Prudence dictates that the welfare of all legitimate stakeholders be considered and that a fair and workable solution be found," the statement said.

Dow reported full-year earnings of $579 million, or 62 cents per share, compared with $2.89 billion, or $2.99 per share, in 2007. Annual sales rose 7 percent to $57.51 billion from $53.51 billion in 2007.

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