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Farm division evades slowdown at Dow Chemical

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Dow Chemical's agriculture division avoided headwinds from a "slow-to-no growth" economic environment to post its best ever fourth-quarter results, led by soaring seed sales.

The US-based chemicals conglomerate reported a net loss of $716m in the October-to-December period, widened from a $20m loss a year before.

While this included a $990m charge for implementing plans to axe 5% of its workforce, close 20 plants and write down the value of its lithium ion battery business, even excluding one-off items the group's earnings came in a $0.33 per share, a little short of Wall Street expectations.

"The second half of 2012 saw significant deterioration in the markets we serve, particularly in China," Andrew Liveris, the Dow chairman and chief executive, said, adding that the group had undertaken "aggressive action to mitigate the effects of a slow-to-no-growth global environment".

New products

However, he said that Dow's agricultural sciences business, which sells seeds and sprays under brands such as Chlorpyrifos and Herculex, "continues to outperform, driven by its technology pipeline".

Sale of new agrichemicals rose 11%, narrowly ahead of the 10% for the crop protection portfolio as a whole.

The result leaves "the business on track to exceed its target of $800m in sales from [new] products by 2013", Dow said.

Seed in demand

Sales of seed soared 44%, "driven by continued strong growth in both North America and Latin America," Dow said.

Farmers in South America maximised sowings, ahead of harvests now in their early stages, in an attempt to cash in on elevated crop prices, while US growers are expected to follow suit this spring.

The extent of expected US demand, particularly for corn seed, has prompted some talk of a shortage of supplies following last year's disappointing harvest, and rumours of farmers stocking up on seed early to avoid being caught short.

Overall agriculture division earnings before interest, tax, depreciation and amortisation (ebitda) rose 8% to $156m, on sales up 17% at $1.6bn – with both figures recorded for an October-to-December quarter.

Dow Chemical shares fell 6.7% to close at $32.20 in New York.


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