Dow Chemical unfazed by higher energy costs

NEW YORK (Reuters) - Dow Chemical Co barely blinked at rallying energy costs in the fourth quarter as it tapped fixed-cost supplies from the Middle East and boosted customer pricing by 10 percent.

The largest U.S. chemical maker said the higher prices offset $685 million in higher costs for crude oil and natural gas, the building blocks for many of the plastics and paints that are Dow's breadwinners.

Shares rose 1.8 percent in premarket trading.

Dow's joint ventures, including Kuwait-based MEGlobal and Equate, guarantee it fixed pricing for some of its raw material supply. Even as energy prices rise around the world, Dow's own costs remain relatively low and it is able to still charge the market rate.

Sales in the company's lucrative plastics business, which relies heavily on crude supplies, rose 20 percent to $2.9 billion.

Dow's resilience in the face of high prices stands in contrast to rival DuPont , whose profit was dented by higher raw material costs.

Several of Dow's businesses, including electronic and specialty materials, also make specialized products highly in demand, allowing the company to easily pass along higher costs. Apple Inc , for instance, uses Dow's products to make the iPod.

"The pricing is being set by the higher-cost crude oil link. Dow's feedstock costs are flat in these low-cost areas and crude oil prices are ripping," Alembic Global Advisors analyst Hassan Ahmed said. "That stands to benefit them."

UNIT STRENGTH

Dow's quarterly results also got a boost from brisk agricultural and automotive sales.

Latin American buyers gobbled up much of Dow's fungicides, pesticides and genetically modified seeds, sending sales in that unit up 19 percent and volume up 20 percent.

Sales in the coatings and infrastructure unit slipped 3 percent due in part to sagging construction activity across the globe.

The automotive industry continued to buy Dow's polyurethane

and other products that reduce a car's weight and increase fuel efficiency. Dow Automotive Systems saw double-digit volumes, the company said.

U.S. industrywide auto sales rose 20 percent last month, top automakers such as General Motors and Ford said earlier this week.

QUARTERLY RESULTS BEAT STREET

Net income rose to $426 million, or 37 cents per share, compared with $87 million, or 8 cents per share, in the year-earlier period.

Excluding one-time items, including costs related to Dow's 2009 acquisition of rival Rohm & Haas, the company posted profit of 47 cents per share. Analysts expected earnings of 35 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 11 percent to $13.77 billion. Analysts expected $12.48 billion.

Dow's earnings from joint ventures jumped to $313 million from $219 million in the year-ago period. It was the highest quarterly earnings from joint ventures in the company's history, Dow said.

Dow said much of its growth will continue to come from countries like China and India, though it noted United States results are improving.

"With inflation concerns in emerging geographies, lingering unemployment issues in the United States and sovereign debt issues in Europe, we remain prepared for a reversal in momentum," Chief Executive Andrew Liveris said in a statement.

Shares rose 1.8 percent to $37.30 in premarket trading. The stock has traded between $22.42 and $36.78 in the past 52 weeks.

(Reporting by Ernest Scheyder; Editing by Derek Caney, Dave Zimmerman)

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