Dow Chemical raises asset sale target to $3 bln-$4 bln

Reuters

* Third-quarter adjusted profit $0.50/share vs est. $0.54

* Weak performance materials unit weighs on profit

* Shares down 1.5 pct

By Swetha Gopinath and Garima Goel

Oct 24 (Reuters) - Dow Chemical Co said it nowexpects to raise between $3 billion and $4 billion from assetsales in the next 18 to 24 months, at least double its earliertarget, as it looks to shed businesses exposed to commodityprice swings.

The bulk of what Dow Chemical plans to sell is housed in itsperformance materials business, which was mainly responsible forthe company's weaker-than-expected quarterly results.

Dow Chemical shares were down 1.5 percent at $40.45 in earlyafternoon trading on Thursday.

The performance materials unit includes the epoxy andcommodity chlorine derivatives businesses that Dow Chemicalwants to sell.

"In performance materials, we are still facing significantheadwinds and so that's why you see us increasing thatdivestiture target to $3 billion-$4 billion," spokeswomanRebecca Bentley said.

Dow Chemical was earlier targeting proceeds of $1.5 billion from sales of non-core assets.

"It's possible that they will even increase that targetagain," UBS Investment Research analyst John Roberts said.

The company will shed its epoxy business through a jointventure or a sale, with a transaction expected in the near term,Chief Executive Andrew Liveris said on a conference call.

Demand for epoxy resins, used in windmill blades and a hostof other products, has tumbled due to excess capacity in Chinaand the loss of subsidies for wind energy in Europe.

Liveris said the company would sell parts of its chlorineand derivatives assets such as chlorinated organics -- used inelectronics and refrigerants among other things -- and vinyls,used to make a raw material for water pipes.

The company said in August that it was also looking atoptions for its European construction materialsbusinesses.

"We are moving away from being all things to all markets andgoing deeper and narrower into profit pools ...," Liveris said,adding the company's focus would now be electronics, packagingand agriculture.

The company sold its polypropylene licensing and catalystbusiness to smaller rival W.R. Grace & Co for $500million this month.

The largest U.S. chemical maker by sales has divestednon-core businesses representing about $8 billion in revenuesince 2009.

PLASTIC GAINS OVERSHADOWED

The performance plastics business, Dow Chemical's largestunit, has enjoyed margin expansion, driven by abundance of cheapshale-derived natural gas, used to produce ethylene, a buildingblock for plastics. EBITDA at the segment shot up 32 percent.

The company expects strong margins to continue in thebusiness, Chief Financial Officer William Weideman said on thepost-earnings call, adding that its agricultural sciencesbusiness would continue to grow as well.

EBITDA at the performance materials business fell 36 percentin the third quarter.

Dow Chemical's net income rose 20 percent to $594 million,or 49 cents per share, helped mainly by the plastics, packaging,coatings and electronics businesses.

The adjusted profit was 50 cents per share, missing theaverage analyst estimate of 54 cents per share.

Revenue rose 1 percent to $13.73 billion. Analysts onaverage had expected $13.99 billion.

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