Dow Chemical Co’s adjusted quarterly profit jumped 16 per cent, topping analysts’ estimates, driven by robust demand for a new line of crop protection products.
A steady climb in United States farm income has increased demand for biotech seeds and pesticides, to the benefit of both Dow Chemical and bigger rival DuPont, Reuters reported.
Dow Chemical’s agriculture sciences business also benefited from strong demand from Latin American farmers for crop protection products such as herbicides and insecticides.
Sales at the agribusiness, which supplies seeds, oils and farm chemicals, jumped 10 per cent in the quarter, the highest growth among its six operating segments.
Margins at the performance plastics unit, Dow Chemical’s biggest, jumped to 27.5 per cent in the second quarter from 20.5 per cent a year earlier, also helping quarterly results. The unit reported its sixth quarter of growing margins.
The business, which supplies plastics to toymakers, builders and carmakers among others, generated nearly a quarter of the company’s total sales.
“We are fully implementing aggressive improvement plans in those segments that do not currently meet our return on capital expectations,” Chief Executive Andrew Liveris said in a statement.
Dow Chemical has divested non-core businesses representing about $8bn in revenue since 2009 and plans to raise an additional $1.5bn from asset sales.
Bigger rival DuPont said on Tuesday it planned to exit its titanium paint pigments business to focus on its growing agricultural unit, where higher sales helped its second-quarter profit beat analysts’ estimates.
Dow’s net income rose 72 per cent to $2.34bn, or $1.87 per share, in the second quarter, helped by a $2.2bn arbitration award.
Excluding the arbitration award and other one-time items, Dow earned 64 cents per share, just beating the average expectation from analysts for 63 cents per share.
Midland, Michigan-based Dow Chemical’s shares closed at $34.37 on Wednesday on the New York Stock Exchange.