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Dow moots sale of its ag sprays unit - and it might not be alone

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"Everyone is talking to everyone," said the boss of Dow Chemical, as he painted a picture of an agricultural chemicals industry poised for a shake-up.

The US chemicals giant on Thursday unveiled a two-to-three year plan of "targeted actions", amid an "intense focus on delivering earnings growth and increasing shareholder returns."

And in terms of "portfolio actions", the shake-up will be targeted at its agricultural seeds and sprays division, Dow AgroSciences.

Andrew Liveris, the Dow chief executive, said that the US-based group was ready to "review all options" for the division.

Shares of the company, which raised its quarterly dividend, jumped as much as 8.4% in New York.

Dow also unveiled a rise in earnings to the equivalent of $0.82 per share, ahead of Wall Street expectations of a $0.69-per-share result.

'Open to anything'

Mr Liveris said "given the potential synergies in a newly consolidating agricultural market, an attractive opportunity to release value may be upon us".

An analyst on the conference call, James Sheehan of SunTrust Robinson Humphrey, expressed the view that Dow's best option for the division might be to sell it altogether.

"We're open to all construct that releases more value," said Mr Liveris, who did not rule out the possibility of floating a minority stake in the ag unit, or spinning it off.

Falling incomes

Agricultural input companies are smarting from reduced farmer incomes.

US-based operators are particularly hard hit, due to the strengthening dollar which has threatened overseas revenues.

This month the agrichemicals group FMC Corp cut its forecast for full-year profits for a second time, blaming an "extraordinary operating environment" in Brazil prompted by weakness in the real, while rival Platform Specialty Products also cut its earnings outlook .

Monsanto itself has unveiled below-forecast results, and forecast profits in its new financial year coming in below analyst expectations.

And on Wednesday, Mike Mack announced his resignation as chief executive of Syngenta, the world's biggest agrichemicals group, after a set of disappointing company results, and a collapse in its share price after it spurned a $47bn bid from Monsanto.

'Everyone talks to everyone'

Although the Monsanto bid was rejected by the Syngenta board, which means that a change in executive leadership doesn't necessarily bring any change in policy, the reshuffle with draw the attention of an industry that is closely watching Monsanto's moves.

"Since the Monsanto-Syngenta conversations began in May, you could imagine that every player talks to everyone," said Mr Liveris.

And Monsanto is still on the warpath, after the US group said that it was looking for new acquisitions in the wake of the failed Syngenta bid.

DuPont boss leaves

Meanwhile, this month has also the chief executive of chemical group DuPont, Ellen Kullman, stepped down, to be replaced by Edward Breen who has a reputation for corporate shake-ups.

He is known for his restructuring of the security tech company Tyco, which was facing bankruptcy.

Observers have argued that Mr Breen's appointment as acting chief executive increased the chance of a split in the company.

Citigroup at the time said that "we see logic in combining Dow and DuPont's ag businesses".

Share buyback accelerated

Dow announced that over the three months to the end of September, its operating profit rose 11.5% to an underlying $959m, despite a drop of 16% to $12.04bn in revenues.

While revenues fell 16% to $12.04bn, profits were boosted by lower raw material costs.

In agriculture, Dow reported a rise to $39m in losses at the ebitda (earnings before interest, taxation, depreciation and amortisation) level, compared with a $15m loss a year before.

Underlying sales fell by 15.7% to $1.15bn, with the group highlighting "currency headwinds" in Latin America, where the weakness of the real, and elevated inventories, have stemmed buyers' appetite to purchase imported goods.

"Seeds reported decreased sales on the shift of acreage from corn to soybeans in Latin America and North America, as well as inventory pressures," Dow said.

Shares in Dow, which also said it would accelerate a $5bn share buyback scheme, were up 4.4% at $49.55 in early afternoon deals in New York.

By William Clarke

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