(Bloomberg) -- DowDuPont Inc., formed by the combination of the largest U.S. chemical makers, reported preliminary third-quarter profit that beat analysts’ estimates as prices climbed and demand rose in most of its markets.
Earnings excluding some items rose to 55 cents a share from 50 cents a year earlier, when calculated as if the companies were always merged, DowDuPont said in a statement Thursday. The company was expected to earn 41 cents a share, according to the average of analyst estimates compiled by Bloomberg. Pro-forma sales climbed 7.6 percent to $18.3 billion, beating the $17.5 billion average estimate.
The Aug. 31 merger of Dow Chemical Co. and DuPont Co. created the world’s largest chemical maker until the company executes its plan to split into three. Third-quarter results were driven by “robust consumer-led demand” and higher prices, the company said. The gains more than made up for higher costs, weak agricultural conditions in Brazil and the impact of Hurricanes Harvey and Irma. Hurricanes reduced earnings in the quarter by about $250 million, the company said last month.
“Given that DowDuPont already recalibrated expectations for the hurricane impacts and headwinds in Brazil, the upside surprise is, in our view, more positive than it looks, and bodes well for Q4,” Laurence Alexander, an analyst at Jefferies & Co. who recommends buying the shares, said in a note to investors.
The shares gained 1.6 percent to $72.20 before the start of regular trading as of 8:34 a.m. in New York.
The company last month announced changes to its split-up plan that will increase the material science unit’s focus on commodity products such as polyethylene plastic. The agriculture unit was unchanged, while the specialty products business will gain silicones, auto adhesives and pharmaceutical ingredients.
On a net basis, the company earned 32 cents a share on revenue of $15.4 billion. Adjusted earnings exclude costs for integration and separation, restructuring, certain taxes and amortization of changes in the value of DuPont’s inventories, as well as a gain from the sale of a co-polymers business.
Final results for the quarter are due to be announced Nov. 2.
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