Dow Corning Corp., which is equally owned by Dow Chemical Co. (DOW) and Corning Inc. (GLW), reported a 57% surge in fourth-quarter profit on Wednesday, piggybacking on a "significant recovery" in its silicones business.
Dow Corning, which makes silicone products, said its fourth-quarter net income increased 57% to $270.5 million from $172.6 million in the fourth quarter of 2008.
Total sales for the fourth quarter of fiscal 2009 were $1.47 billion, up 13% from sales of $1.30 billion in the same quarter of 2008.
On a non-GAAP basis, Dow Corning's net income for the fourth quarter climbed to $211.3 million from $174.2 million a year ago.
The company recorded a net adjustment of $3.8 million in the fourth quarter, which was related to its restructuring program in fiscal 2009. No restructuring charges were recorded in the fourth quarter of 2008.
Dow Corning took a $63.0 million charge related to adjusted for tax benefit associated with foreign dividends in the fourth quarter, compared to nil charges in the prior-year quarter.
In the fourth quarter of 2008, the company had recorded a charge of $1.6 million, which was recorded as adjustment for asset impairment. The charge was related to a loss from a write down of investments in Fannie Mae and Freddie Mac securities in fiscal 2008.
For fiscal 2009, Dow Corning reported a net income of $579.6 million, a decline of 22% from net income of $738.7 million reported in 2008.
Dow Corning reported adjusted consolidated net income of $578.0 million for fiscal 2009, compared to adjusted net income of $775.7 million in fiscal 2008. The adjusted net income of 2009 excluded restructuring charges of $61.4 million and the tax benefit of $63.0 million associated with foreign dividends. Results for fiscal 2008 were adjusted for a $37.0 million loss from write down of investments in Fannie Mae and Freddie Mac securities.
Total sales for fiscal 2009 were $5.09 billion, down 7% from sales of $5.45 billion reported in fiscal 2008.
Commenting on the results, Donald Sheets, executive vice president and chief financial officer of Dow Corning, said, "Dow Corning saw a significant recovery in its silicones business in the second half of the year, as our two-brand strategy allowed us to get the right products and solutions into the hands of our customers. Our polycrystalline silicon business through Hemlock Semiconductor Group had another solid year, operating at expected manufacturing rates while supplying all contracted volumes to both solar and semiconductor customers."
Looking forward, Sheets said, "While it's still a volatile economic environment, the year ended with many positive signs. Dow Corning's fourth quarter sales performance is another significant step in the global recovery of our business. 2010 will be another active year for Dow Corning as major capital expansions in China will be completed and Hemlock Semiconductor Group's expansions in the United States will continue to bring new capacity online. We'll also focus on expanding our markets by investing in our diverse innovation portfolio and by continuing to expand our geographic footprint."
DOW is losing $0.48 or 1.74%, and is trading at $27.09 on a volume of four million shares on the New York Stock Exchange.
GLW is currently trading at $18.84, up $0.13 or 0.69%, on a volume of 4.62 million shares on the New York Stock Exchange.
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