Dow Chemical Posts Jump in Profit - TheStreet

Shares of

Dow Chemical

(DOW) - Get Report

rose almost 4% Thursday after the company posted a jump in third-quarter earnings.

But the company said it has difficulty forecasting fourth-quarter results due in part to unpredictable feedstock and energy prices.

Dow earned $332 million, or 36 cents a share, in the third quarter, compared with $128 million, or 14 cents a share, a year ago. Analysts were expecting 25 cents a share. Total sales were $8 billion, up from $7.1 billion last year.

Shares of the Midland, Mich.-based company rose $1.37 to $36.22 Thursday.

"Dow had a substantial improvement in third-quarter results, in spite of a greater than 20% increase in feedstock and energy costs compared with the third quarter of last year," said J. Pedro Reinhard, chief financial officer. "Volume growth was broad-based across geographies and businesses, and when coupled with price improvements and a continued focus on significant cost reductions, the result was markedly better earnings and cash flow."

Purchased feedstock and energy costs in the quarter rose $465 million. Year to date, feedstock and energy costs are almost $2.4 billion higher than in the same nine-month period last year, the company said.

Dow also said prices rose in all units and geographic regions during the quarter. The strongest gains were in the Asia Pacific region and Latin America. Meanwhile, volume rose in most segments and in all geographic areas, led by double-digit growth in the Asia Pacific region.

The company said it expects demand for chemicals to increase as the economy improves, but that unstable feedstock and energy costs and pressure on prices make it hard to predict fourth-quarter earnings. Analysts have forecast 25 cents a share.

"With possible margin compression and a normal seasonal slowdown, it will be a real challenge for us to match third-quarter results in the fourth quarter," said Reinhard. "However, we are confident that earnings will be substantially better than fourth quarter a year ago as we continue to focus on disciplined cost control measures." The company lost 18 cents a share in the year-ago fourth quarter.