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Dow Chemical second quarter sales up 65pc to $487 million

DUBAI - The Dow Chemical Company reported sales of $16.4 billion for the second quarter of 2008, 23 per cent higher than the same period last year, setting another quarterly sales record. Double-digit price increases were recorded in all operating segments and all geographic areas, with strong performance in the India, Middle East & Africa (IMEA) region, said a company statement.

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The IMEA region posted a sales increase of 65 per cent from the same period last year to $487 million. Volume in the region increased 47 per cent, while price rose 18 per cent. Despite a 24 per cent drop in revenue worldwide, driven by rising energy costs, the region played a significant role in delivering strong volume gains seen primarily in the Performance Chemicals and Basic Chemicals Businesses. At a Company level, net income for the quarter was $762 million. Equity earnings were $251 million for the quarter, once again demonstrating strong and consistent contributions from joint ventures to the Company's results.

"The surge in oil prices from first to second quarter added another $1 billion of cost sequentially, and we reacted quickly by announcing two broad-based price increase initiatives, adjusting plant operating rates and implementing additional cost-cutting measures," said Andrew N. Liveris, chairman and chief executive officer. "The fast implementation of these price increases limited margin compression to approximately $130 million in the quarter. This is a remarkable performance when you consider that this is only 1 to 2 per cent of our total quarterly hydrocarbon and energy costs.

"These short-term actions, in addition to key elements of Dow's strategy, such as our large global footprint, our investments in Performance businesses and our asset light ventures, enabled us to weather unparalleled increases in hydrocarbons, supply chain and other costs," Liveris added.

Commenting regionally, John Dearborn, president, Dow Chemical IMEA, said "As the Middle East petrochemicals industry continues to evolve and expand, we remain focused on our regional growth strategy. Significant developments, such as our pending joint venture with Petrochemical Industries Company (PIC) of Kuwait, to be called K-Dow Petrochemicals, and our mega project with Saudi Aramco in Saudi Arabia will enhance our ability to consistently deliver innovation and continuously grow with our customers in the Middle East."

Dow has eight current and proposed Middle East joint ventures in the UAE, Egypt, Kuwait, and Libya as well as in Saudi Arabia, where Dow and Saudi Aramco are in the negotiation phase for the formation of a joint venture to build, own and operate a world-scale chemicals and plastics production complex in the Eastern Province. From the opening of its first commercial office in Cairo in the early 1970s to its facility in Jebel Ali in Dubai and its 10-year partnership in Kuwait with EQUATE, Dow has established a solid presence in the Middle East petrochemicals industry.