Net income rose to $1.18 a share from 79 cents a year earlier, Midland, Michigan-based Dow said Thursday in a statement. Profit excluding some items was 84 cents, exceeding the 76-cent average of 19 estimates compiled by Bloomberg. Sales declined to $12.4 billion from $14.5 billion, missing the $13 billion average estimate.
Chairman and Chief Executive Officer Andrew Liveris agreed last month to sell the chlorine business, on which the company was founded 118 years ago, to focus on more profitable units such as plastics packaging. Profit margins were the widest in a decade, led by a 5.6 percent gain in plastics, Dow's largest unit, as costs tumbled for oil and natural gas liquids such as propane.
"Margins from propane are up significantly, which completely plays into Dow's wheelhouse," Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said by phone Wednesday.
Profit rose in four of Dow's five business segments, with agriculture being the exception. The plastics unit overcame a 23 percent drop in sales to increase earnings 2 percent to $985 million from a year earlier.
In January, Dow's board gained two members backed by Third Point, the hedge fund founded by Dan Loeb, along with two other independent directors. The accord avoided a proxy fight with Third Point, which had criticized Liveris' performance and called for a break up of the chemical maker.
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Liveris has defended the company's integrated model. He's argued that Dow is more profitable because it produces commodity chemicals for use in higher-value products such as pesticides and plastic films for packaging.
Meanwhile, he embarked on a program to divest $7 billion to $8.5 billion of lower margin assets, which he said Thursday now will exceed $11 billion after the March 27 agreement to sell Dow's chlorine business to Olin Corp. Liveris told investors in November that margins will widen with the sale of less- profitable assets and that earnings will climb with the start of new plants later this year in Texas and Saudi Arabia.
