Dow AgroSciences, a wholly owned subsidiary of The Dow Chemical Company (DOW) recently announced collaboration with the Australian Centre for Plant Functional Genomics (ACPFG) to enhance the quality of crops. Per the agreement, both the companies will utilize their expertise to develop plants that will possess higher tolerance against environmental stress and exhibit improved agronomic performance. However, the financial terms of the deal were not divulged.
Dow expects the collaboration to be beneficial as ACPFG is a leader in plant genetics and genomics research, and boasts unique capability of understanding the plants stimulus to environmental changes. On the other hand, ACPFG believes that the collaboration with DOW will provide greater access to international techniques and resources.
Michigan-based Dow is a leading chemical company, whose products are used across a broad spectrum of industries. The company posted earnings of 55 cents a share in the second quarter of 2012, missing the Zacks Consensus Estimate of 64 cents and significantly trailing the year ago earnings of 85 cents. Dow recorded a profit of $649 million in the quarter, a roughly 34% decline from the year-ago level due to weak economic conditions in Europe and soft demand.
Revenues tumbled 10% to $14,513 million, falling behind the Zacks Consensus Estimate of $15,961 million. Sales fell across all segments except Agricultural Sciences, which has recorded double-digit revenue growth in the quarter. Revenues in Europe slid 10%, largely due to currency headwinds.
The Agricultural Sciences segment registered record revenues of $1.7 billion, a 12% rise from the year-ago quarter. Volumes in the segment climbed 10% while prices rose 2%.
Looking ahead, Dow sees lower-than-expected recovery in global economy in the second half of 2012. The company plans to beef up cost reduction and efficiency programs to deal with the challenging macroeconomic environment.
Dow faces stiff competition from EI DuPont de Nemours & Co. (DD). Currently, the stock retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. Moreover, we have a long-term Neutral recommendation on the company.
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