Dow Chemical Earnings Jump

But adjusted earnings are a few cents below estimates.
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Dow Chemical's

(DOW) - Get Report

second-quarter earnings rose 85% from a year ago thanks to improvements in both sales and profit margins.

The company earned $1.27 billion, or $1.30 a share, in the quarter, compared with $685 million, or 72 cents a share, last year. Sales rose 16% from a year ago to $11.45 billion. Excluding a gain, the company earned $1.20 a share in the quarter. Wall Street was forecasting earnings of $1.23 a share on sales of $12 billion.

The No. 1 chemical company faced various headwinds in the quarter, including a $900 million increase in feedstock and energy prices and a 4% decline in volume. Still, the company was able to raise prices 20%, helping it to its tenth consecutive quarter of margin improvement.

Excluding divestitures, volume fell 1% from a year earlier, reflecting reduced demand in the early part of the period.

Dow Chemical predicted "record" 2005 earnings and higher earnings in 2006.

"As the company moves into the third quarter, price and volume trends have once again turned favorable across virtually all operating segments," it said in a release. "The industry has passed through an inflection point in the up-cycle from a supply-demand perspective."