Dow Chemical Co (N: DOW), the No.1 US chemical maker by sales, reported a better-than-expected quarterly profit, driven by the growth of high-margin business and reducing costs.The company has said it plans to cut costs by $ 300 million this year. Therefore, the company realized $ 90 million in the second quarter ended June 30.
It would be “reasonable to assume” that Dow will exceed its cost savings target for the year, Chief Financial Officer Howard Ungerleider said in an interview Thursday.
Dow and DuPont (N: DD), which is expected to close its merger $ 130 million this year, have been cutting costs by laying off employees and maintain tight control of expenses.
Dow’s operating margin expanded by 160 basis points to 21 percent on earnings before interest, taxes, depreciation and amortization basis (EBITDA).
EBITDA in the business of consumer solutions company soared to $ 1.58 billion in the quarter of $ 169 million, while rose to $ 1.39 billion from $ 240 million in its unit Infrastructure Solutions .
Both units Dow benefited from having full control of Dow Corning, a company of the company with the glassmaker Corning Gorilla Inc (N: GLW).
strategy of focusing on high-margin products by shedding volatile raw materials companies such as their business centenarian Dow chlorine are also bearing fruit.
The company’s stock rose 1 percent in light previous operations.
The merger of Dow-DuPont is the first step in breaking companies into three independent companies focused on agriculture, materials science and specialty products.
It is expected that the executor of EU competence to decide on the offer on Aug. 11.
DuPont and Dow have offered concessions in an attempt to allay antitrust concerns in the EU, according to a filing on the website of the European Commission.
“We remain very well in our timeline to close the transaction before the end of the year,” Ungerleider said.
“No discussion we have had with the European Commission takes us out of that view.”
DuPont also reported a higher than expected quarterly profit on Tuesday and forecast a 50 percent jump in operating profits in the third quarter as cost-cutting intensifies.
Dow’s net profit attributable to shareholders almost tripled to $ 3.12 billion, or $ 2.61 per share, in the quarter ended June 30.
If items, it earned 95 cents per share, well above the average analyst estimate of 85 cents are excluded, according to Thomson Reuters I / B / E / S.
These items include a gain per share $ 2.20 in relation to Dow Corning agreement.
Sales fell 7.4 percent to $ 11.95 billion, but the average estimate of $ 11.24 billion beat.