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Last updated: April 23, 2014 8:09 pm
Mr Liveris disclosed the meetings as Dow reported an underlying 14 per cent increase in first-quarter earnings, exceeding analysts’ expectations, thanks to what the Dow chief called “self-help measures” to cut costs.
He also confirmed that Dow was committed to a more active disposal programme than it proposed last year, and now intended to sell businesses worth $4.5bn to $6bn by the end of next year, including about $800m of sales already announced.
Dow has been under pressure to improve its performance since Third Point, the hedge fund led by Mr Loeb, revealed a stake in January. Third Point wrote in a letter to its investors that Dow’s shares had “woefully underperformed” over the past decade and the company should look at splitting off its petrochemicals operations.
Mr Liveris said Dow had learnt lessons from Mr Loeb’s criticism, such as the need to be more transparent about its business, but still rejected his call for a break-up, saying he lacked the management’s “sheer weight of knowledge” about how the company earned its profits.
“He’s one of a range of investors who have a point of view. Some of that point of view is right and some of it is wrong,” Mr Liveris said.
“When you share information you end up getting a better point of view. There’s some things we’ve learnt about how we’re perceived, and there’s some things they’ve learnt about how we make money.”
He added that the businesses that Dow planned to sell were mostly smaller operations that did not have strong growth prospects but still needed capital and research and development spending.
“There are lots of little markets that we are in that we don’t need to be in,” he said. “We’d rather allocate capital to markets that are big, significant and growing.”
Mr Liveris said the world economy was still in a “slow recovery”, and higher energy prices had hit profits in the quarter, but it had still managed to increase margins.
There are lots of little markets that we are in that we don’t need to be in. We’d rather allocate capital to markets that are big, significant and growing
- Andrew Liveris, chairman and chief executive, Dow Chemical
Earnings per share were 79 cents for the quarter, up from 69 cents in the equivalent period of 2013, excluding one-off charges, and higher than the average of analysts’ forecasts of 71 cents.
Revenues were slightly weaker than expected at $14.5bn, up about 0.5 per cent.
Hassan Ahmed, analyst at Alembic, said in a note that the increase in profits was driven by rising margins at most of Dow’s divisions, and the earnings were “a clear sign of good execution”.
The strongest growth in both sales and earnings before interest, tax, depreciation and amortisation came from Dow’s coatings and infrastructure division, which includes building materials such as insulation and roof tiles.
The only one of the six divisions where ebitda fell was feedstocks and energy, which was hit by a fall in the prices of its products such as caustic soda.
Across the group, the strongest region was Asia-Pacific, where sales volumes grew 8 per cent excluding the effects of disposals.
Mr Liveris said he believed China had settled into a reported annual growth rate of 7 to 7.5 per cent, although “it hasn’t felt like 7 to 7.5 per cent for a while”, but Dow was benefiting from faster growth in its markets such as chemicals for agriculture and the electronics industry. Dow’s sales in China were up 9 per cent in the quarter compared with the equivalent period of 2013.
In the past year, Dow shares have risen 58 per cent, compared with a 20 per cent increase for the S&P 500 index.
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