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S & P revises Dow Chemical outlook to 'positive'

Tue, 08/10/2010 - 12:13pm
The Associated Press

Standard & Poor's Ratings Services revised its outlook on Dow Chemical Co. to "positive" from "stable" after seeing positive signs in the company's second-quarter earnings report.

The ratings service also said Tuesday it was reaffirming all of its ratings on Dow and its subsidiaries, Rohm and Haas Co. and Union Carbide Corp. That includes a corporate credit rating of "BBB-," S&P's lowest level investment-grade rating.

The nation's largest chemical maker said earlier this month that increased demand and higher prices for chemicals used in products ranging from consumer electronics to adhesives helped it swing to a profit from a year-ago loss. It earned $566 million, or 50 cents per share, in the second quarter, after paying preferred dividends.

Its revenue also jumped 20 percent to $13.62 billion.

The company's earnings report showed "continued strengthening of its operating results and financial profile, and supports our view that Dow has the capacity to achieve further meaningful improvement to credit metrics," S&P analyst Kyle Loughlin said in a statement from the company.

S&P said Dow had significant financial risk following the close of its $18.4 billion acquisition of Rohm and Haas last year. But the ratings service also noted that Dow has made "substantial progress" toward improving its financial profile and has achieved about $2.5 billion in gross debt reduction during the past year.

Dow shares fell 5 cents to $25.95 in Tuesday afternoon trading.

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