- The Washington Times - Thursday, January 30, 2003

MIDLAND, Mich., Jan. 30 (UPI) — Dow Chemical Co., the nation's largest chemical maker, said its fourth-quarter losses widened as high-energy costs and an asbestos charge offset an increase in sales.

The chemical giant also announced plans to close two Texas plants and cut up to 4,000 jobs, and said it will cut spending this year by about 25 percent.

Dow Chemical said it posted fourth-quarter net loss of $809 million, or 89 cents a share, compared with a net loss of $37 million, or 4 cents during the same period a year ago.

The latest results included a $828 million charge to cover future asbestos claims stemming from Dow's purchase of Union Carbide two years ago. Dow also increased its asbestos liability reserve to $2.2 billion.

Asbestos was widely used for fireproofing and insulation until the 1970s, when scientists concluded that inhaled fibers could be linked to cancer and other diseases.

Excluding the one-time items, Dow Chemical said its loss was 18 cents a share. Revenue rose 9 percent to $6.9 billion from $6.3 billion a year ago, reflecting 6 percent higher price and 3 percent higher volume.

The increase in prices in the quarter was not enough to offset a 35-percent increase in feedstock and energy costs compared to the same quarter last year, resulting in a margin squeeze of approximately $200 million, Dow Chemical said.

William S. Stavropoulos, chief executive officer, said, "This has been a very disappointing quarter. It highlights the urgent need for a more disciplined and focused approach to cost control and the continued requirement to increase prices to offset higher feedstock and energy costs.

"We recognize that the asbestos issue has created uncertainty for investors. We believe that quantifying the cost of resolving Carbide's asbestos claims will alleviate that uncertainty and enable our company to realize its full value," said Stavropoulos.

"This does not signal any change in Union Carbide's legal strategy," he added.

Stavropoulos said, "Despite extended trough conditions in the chemical industry, we are taking concerted action to make 2003 a better year than 2002. Although we expect the first quarter of the year to be particularly challenging due to rising feedstock and energy costs, it is not our intention to simply wait for conditions to get better. We are taking specific steps to reach our key objectives in 2003: to improve our earnings and restore our financial strength."

Stavropoulos said the company planned to close two plants in Texas run by Union Carbide Corp., the chemical company Dow acquired.

He also said the company planned to lower capital spending in 2003 by $400 million, or about 25 percent, and cut 3,000 to 4,000 jobs from its work force.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide