Dow Chemical's first-quarter net profit increased by 29% year-on-year to US$710 million

Dow Chemical Co (DOW), the largest US chemical manufacturer, today released its first fiscal quarter 2011 financial report. The report shows that Dow Chemical's first-quarter net profit was US$710 million, an increase of 29% over the same period of last year, exceeding Wall Street analyst expectations, mainly due to the increase in the price of sodium hydroxide.

The report shows that Dow Chemical’s net profit for the first quarter was US$710 million, and earnings per share were 54 cents, which was better than the same period last year. In the first quarter of fiscal 2010, Dow Chemical had a net profit of 551 million U.S. dollars and earnings per share of 41 cents. Excluding earlier debt repayment costs and expenses for a merger and acquisition transaction, Dow Chemical's first-quarter earnings per share were 82 cents, exceeding analysts' previous expectations. According to a Bloomberg survey, the 14 analysts surveyed expected Dow's first-quarter earnings per share to be 67 cents. Dow Chemical's revenue for the first quarter was $14.7 billion, an increase of 9.8% from $13.4 billion in the same period last year.

Relative to the price of crude oil, the price of natural gas in the United States is low, which benefits Dow Chemical because of the increase in the supply of shale gas. Dow Chemical is planning to increase ethylene production by 20% in the Gulf Coast area. Ethylene is used as raw material for the production of plastics (11760, -85.00, -0.72%). The first quarter net profit of Dow Chemical's commodity plastics division increased by 13% over the same period of last year, and the net profit of the basic chemical sector more than doubled over the same period of last year, due to the increase in the price of sodium hydroxide and the use of sodium hydroxide for production. Raw materials for paper, alumina, and soap.

The so-called "shale gas" (ShaleGas) generally refers to the natural gas that is trapped in the hard rock layer of the gas field after the existing natural gas oil field is completed. Shale gas is an important unconventional natural gas resource. Its formation and enrichment have their own unique characteristics, and they are often distributed in shale source rock formations with large thickness and widely distributed in the basin. Compared with conventional natural gas, shale gas development has the advantages of long mining life and long production cycle.

Charles Neivert, an analyst at investment firm Dahlman Rose & Co, said: "We believe Dow Chemical's basic chemicals division continues to show strong growth. We expect Dow Chemical to achieve the next few quarters. The reason for the higher profit margin is that the market is still in tight supply for most of the company's product portfolio.” Niwalt rated Dow as “Hold”.