10/27/2011 02:37 EDT | Updated 12/27/2011 05:12 EST

Dow Chemical 3rd-qtr profit on higher prices, growth in energy and agriculture

NEW YORK, N.Y. - Dow Chemical Co. said Thursday its third-quarter earnings jumped 59 per cent on higher prices and sales growth in Asia and Latin America that countered lower sales volume closer to home.

It said it's investing heavily in developing countries to take advantage of this growth and balance what it sees as "ongoing deterioration in confidence in the pace of global economic recovery."

Shares of Dow Chemical, which gained in premarket trading after the quarterly results were announced, surged more than 8 per cent by midday after European Union leaders agreed on a deal to slash Greece's massive debts.

The Midland, Mich., company reported net income of $815 million, or 69 cents per share, for the July-September period, up from $512 million, or 45 cents per share, a year earlier. Excluding one-time items, earnings were 62 cents per share compared with 54 cents per share in the third-quarter of 2010.

Revenue rose 17 per cent to $15.11 billion from $12.87 billion a year ago. Sales volume was flat, as decreases in North America were offset by improvements in Latin America and Asia.

Analysts polled by FactSet expected adjusted earnings of 63 cents per share on $14.63 billion in sales.

Dow said the biggest revenue gains were in its feedstock and energy unit as well as its agricultural sciences division.

Sales in feedstocks and energy sales rose 34 per cent to $2.9 billion. Sales soared 36 per cent while volume fell 2 per cent. Feedstocks are raw materials used for fuel, including everything from oil to waste vegetable oil.

Agricultural sciences sales rose 27 per cent to $1.2 billion. Volume increased 18 per cent, while prices rose 9 per cent. Dow said this business continues to be driven by products that help crops grow bigger and more plentiful.

Geographically, sales grew the most in Latin America. Volume in North America fell 3 per cent, but prices rose by 17 per cent.

"The new reality is that the world is operating as a two-speed global economy with the developing world strong and the developed regions showing slow-to-no growth," Chairman and CEO Andrew Liveris said in a conference call with analysts. "But let me be clear, taken as a whole, growth continues on a positive path."

While Thursday's debt announcement eased concerns, there are still "two confidence-busting issues that are being perpetuated in the political capitals of the developed world...solvency and liquidity concerns in Europe and the U.S." He expects these concerns coupled with still-high unemployment to keep a lid on growth over the next several quarters in the developed world.

In developing regions, though, Dow says growing populations are continuing to drive investments in many sectors it provides for, including cars, food packaging, energy and water treatment. That's despite what Dow calls a "pause" in those regions' rapid growth.