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Dow Inks New Deal with Victoria, AU

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Dow AgroSciences, a wholly owned subsidiary of The Dow Chemical Company (DOW - Analyst Report), has entered into a new deal with the Victoria Department of Primary Industries in Australia to develop novel plant genetic tools. The new tool will help accelerate the crop yields for farmers in Australia and worldwide.

Per the deal, Dow AgroSciences will work with Agriculture Victoria Services Pty Ltd, the commercial arm of Department of Primary Industries (DPI). The research will be conducted at DPI’s research facilities at Horsham and at a new $230 million Centre for AgriBiosciences, which is currently under construction at Bundoora, Victoria.

The collaboration will be instrumental in developing best crop varieties by deploying transformational technologies. It will also offer tremendous potential to develop new varieties of crops that have improved productivity, agronomic and product quality traits.

Michigan-based Dow is a leading chemical company whose products are used across a broad spectrum of industries. The company posted earnings of 55 cents a share in the second quarter of 2012, missing the Zacks Consensus Estimate of 64 cents and significantly trailing the year-ago earnings of 85 cents. The decline in profits was attributable to weak economic conditions in Europe and soft demand.

Revenues tumbled 10% to $14,513 million, lagging the Zacks Consensus Estimate of $15,961 million. Sales fell across all segments except Agricultural Sciences, which recorded double-digit revenue growth in the quarter. Revenues in Europe slid 10%, largely due to unfavorable currency movements.

The Agricultural Sciences segment registered record revenues of $1.7 billion, a 12% rise from the year-ago quarter. Volumes in the segment climbed 10% while prices rose 2%.

Looking ahead, Dow expects lower-than-expected recovery in the global economy in the second half of the year. The company plans to beef up cost reduction and efficiency improvement programs to deal with the challenging macroeconomic environment.

The company faces stiff competition from EI DuPont de Nemours & Co. (DD - Analyst Report). Currently, the stock retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

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