(Adds Dow's response to lawsuit, updates stock price)
DOW JONES NEWSWIRES
Dow Chemical Co. (DOW) swung to a fourth-quarter net loss,
taking restructuring charges as its manufacturing customers delayed
purchases amid a worsening economic decline.
The chemical giant also filed its response to Rohm & Haas
Co.'s (ROH) breach-of-contract lawsuit that is seeking to force Dow
to complete its proposed $15.3 billion acquisition of the
specialty-chemicals maker. Dow denied all conditions to its
obligation to close have been satisfied and that the unforeseeable
economic and credit crisis has "made it impossible" to seal the
deal without "jeopardizing the very existence of both
companies."
It also denied that it had breached the agreement,
"intentionally or otherwise" or that Rohm had suffered a "material
adverse effect" in its business.
Dow shares were off 4.1% at $10.60 in premarket trading as the
company's fourth-quarter results were well below analysts' downbeat
expectations. The shares have lost nearly half their value the past
month and a half.
The chemical industry has been slipping as the spreading
economic malaise has hurt demand for the basic chemicals and
plastics used in most industrial and consumer goods, even in once
hot markets like China.
"As we enter 2009, we are assuming that the late-2008 demand
levels will continue for several quarters and possibly beyond,"
said Chairman and Chief Executive Andrew Liveris on Tuesday. He
said since many of its customers are running on low inventory, once
a recovery begins, perhaps in the second half of the year, that
"recovery could be rapid."
Meanwhile, Dow reported a fourth-quarter net loss of $1.55
billion, or $1.68 a share, compared with year-earlier net income of
$472 million, or 49 cents a share. The latest quarter included
$1.02 a share in charges from its restructuring and goodwill
write-downs, among other items.
Revenue fell 23% to $10.9 billion as volume slid 17%, reflecting
lower demand in all its operating segments and geographic
markets.
Analysts polled by Thomson Reuters expected earnings of 7 cents
a share on $13.37 billion in revenue.
Chemical makers have been trying to rein in costs by slashing
production and laying off workers, with some filing for bankruptcy.
Dow has announced plans to cut 5,000 full-time jobs, or 11% or its
work force, close 20 plants and sell several businesses. Liveris
also had suggested that Dow's dividend may be at risk.
"We are planning for a global recession throughout 2009 and will
continue to take actions on managing our cash and controlling our
costs with the same intensity that we demonstrated in the fourth
quarter," he said Tuesday.
The industry has been struggling amid weak sales for commodity
chemicals, as well as high energy and other financing costs. Dow
has pursued Rohm as part of its plan to expand into the
higher-margin specialty chemicals business.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com
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