Dow Chemical Company reports second quarter results

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.

The IMEA region posted a sales increase of 65% from the same period last year to $487m. Volume in the region increased 47%, while price rose 18%. Despite a 24% 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 $762m. Equity earnings were $251m 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 $1bn 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 $130m in the quarter. This is a remarkable performance when you consider that this is only 1 to 2 % 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.

Dow Q2 2008 milestones include:
•As an active community member, The Dow Chemical Company Foundation committed KD200,000 to the Lothan Youth Achievement Center (LoYAC) in Kuwait. This charitable commitment is in line with Dow's thirteen-year presence in Kuwait through EQUATE Petrochemical Company K.S.C, a joint venture company established with the petrochemical arm of the Kuwait Petroleum Corporation.
•Dow continued to support the Young Arab Leaders (YAL) through the launch of three multi-faceted development programs targeted at youth, media and companies in the Middle East and the United States. The programs include: the YAL Media Internship Exchange Program (YALMIEP), the Arab American Business Fellowship (AABF) and the YAL Innovation and Entrepreneurship Pilot Program.
•Dow in the Middle East launched DOWLEX PE-RT, a class of polyethylene for pipe applications for elevated temperatures at the Middle East Plastic Pipes conference.
•Dow in the Middle East won the 'Best Workplace Practices' award at the 5th CSR Summit 2008 in Dubai in recognition of the company's innovative and distinctive internal practices.