By Hezron Selvi
NEW YORK (Reuters) - Dow Chemical Co
"Our positive earnings in this recessionary environment were the direct result of our rapid actions to reduce costs and tightly manage operations," Chief Executive Andrew Liveris said in a statement.
In December, Dow said it would close 20 facilities, divest several businesses and cut 5,000 jobs as it throttles back operations to deal with the global slump.
"It all comes down to cost management. Most people thought that their revenues will decline more rapid than their costs. And to me that was the biggest source of the beat," Analyst Hassan Ahmed of HSBC Securities told Reuters.
The company said it had cut spending by $270 million in the quarter from a year earlier. Purchased feedstock and energy costs were down 49 percent.
Agricultural segment sales rose about 8 percent to $1.4 billion.
"There are some signs that the pace of global economic decline is moderating," Liveris said, but noted that he was not counting on material improvements in economic conditions in the near term.
Chemical companies have been hurt by the weakening economy as demand from industries they supply, such as autos, housing and electronics, has fallen drastically.
Dow, the second-largest U.S. chemical company behind DuPont in terms of market capitalization, reported net income of $24 million, or 3 cents a share, down from $941 million, or 99 cents a share, a year earlier.
Excluding items, earnings were 12 cents a share. Analysts on average expected a loss of 20 cents before special items, according to Reuters Estimates.
Sales fell 39 percent to $9.09 billion, while the analysts' average forecast was $11.61 billion.
Dow agreed to buy Rohm and Haas last year, but balked after a key joint venture with Kuwait fell apart. That acquisition, was completed earlier this month after Rohm and Haas sued Dow, has put under pressure to sell assets and raise much-needed cash.
Shares of Dow were trading up 19.62 percent at $16.16 in morning trade on the New York Stock Exchange, while the Standard & Poor's Chemicals Index <.GSPPM> was up 3.4 percent.
(Reporting by Hezron Selvi; Editing by Derek Caney, Lisa Von Ahn, Dave Zimmerman)