Dow Chemical’s (DOW) upcoming acquisition beat estimates this quarter.
Highlights:
* Sales up 12 percent from the prior-year period, primarily driven by timely pricing actions and growth in Rapidly Developing Economies.
* Adjusted earnings per share, excluding special items, up 3 percent versus the prior-year period.
* Proactive cost control and pricing actions coupled with effective financial strategies more than mitigated the impact of deteriorating business conditions.
Rohm and Haas Company (ROH) today reported third quarter 2008 sales of $2,471 million, a 12 percent increase over the same period in 2007, driven by timely pricing actions, favorable currencies, acquisitions, and growth in Rapidly Developing Economies, partially offset by decreased demand in North America and Western Europe. The company reported third quarter 2008 earnings from continuing operations of $129 million, or $0.66 per share, compared to $129 million, or $0.61 per share, for the third quarter of 2007. This quarter’s results include special items totaling $0.24 per share: $0.09 per share in costs associated with the proposed merger with The Dow Chemical Company announced in July; $0.07 per share in costs resulting from the impact of hurricanes on the company’s operations in the quarter; and $0.08 per share in asset impairments and costs resulting from restructuring actions announced in June. Adjusted earnings per share, excluding the special items noted above, were $0.90, up 3 percent compared to $0.87 in the prior-year period.
“The economic and operating environment deteriorated further this quarter, yet we were able to deliver respectable financial performance in the face of these challenges,” said Raj L. Gupta, chairman and chief executive officer of Rohm and Haas Company. “Our coordinated and prompt response to rapidly changing conditions and our timely pricing and cost reduction actions gained significant traction in the quarter allowing us to largely offset rising raw material and energy costs.”
Gupta added, “Our confidence in a bright future for Rohm and Haas Company remains high, and we fully expect to deliver outstanding results for all our stakeholders as we look forward to the merger with The Dow Chemical Company.”
Rohm is the perfect buy for Dow in the current environment. I am convinced beyond any shadow of a doubt the market does not fully understand that the Dow Chemical that reports tomorrow will resemble the Dow Chemical that reports next year (Q2). Gone will be 50% of the highly cyclical and petroleum dependent commodity business and in its place will be the predictable and growing specialty chemical business that is Rohm.
Currently yielding over 7%. How safe is it? Consider this is the 388th consecutive cash dividend issued by Dow. Since 1912, Dow has paid its shareholders cash dividends every quarter and has either maintained or increased the quarterly dividend amount throughout that time. Safe enough?
If it dips after earnings tomorrow, I am buying more..
Disclosure (“none” means no position):Long DOW, ROH
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