By Alison Sider 

Dow Chemical Co. beat market expectations Thursday when it reported stronger-than-expected fourth-quarter sales and profits.

The petrochemical maker said robust growth for its plastics and other industrial products offset price declines in western Europe largely related to the impact of the strong dollar.

Languishing oil prices haven't yet cut into Dow's earnings, but the company isn't immune to fuel-price swings or unfavorable exchange rates, said Howard Ungerleider, chief financial officer.

The company's shares were up sharply at midday, trading nearly 5% higher at $44.89.

Some analysts have questioned whether lower oil prices would cut into Dow's competitive advantage and margins. The company and other U.S. petrochemical manufacturers in the U.S. run their plants on feedstocks derived from cheap natural gas, while overseas competitors use oil-based fuels. High oil prices gave Dow a significant edge over many foreign rivals, but its low-cost advantage is being threatened.

"Let me be clear, I'm not here to state that there'll be no challenges from lower oil," said Andrew Liveris, chief executive of Dow. But he added that the company's integrated and global business model makes it flexible and gives it a buffer to volatile oil and gas prices.

Dow operates some plants overseas that are directly benefiting from lower crude-oil prices, Mr. Liveris said. And lower oil prices should also spur overall economic growth that will raise demand for many of Dow's chemicals.

"We'll work those businesses that are demand-centric and are growing," Mr. Liveris said in an interview with The Wall Street Journal on Thursday.

Mr. Liveris has long defended Dow's structure from critics, including activist hedge fund Third Point LLC, which has pressured Dow to break apart its petrochemicals business from its specialty chemicals segment. Dow agreed in November to appease the firm by adding two directors to its board who were proposed by Third Point, along with two other independent directors who were favored by Dow.

Dow's fourth-quarter profit, excluding one-time items, was 85 cents a share, up from 65 cents a share in the prior-year period. Fourth-quarter revenue was flat at $14.38 billion. Analysts surveyed by Thomson Reuters had projected earnings of 69 cents a share.

Rival DuPont Co. warned earlier this week that its profit this year will take a substantial hit because of the dollar's strength relative to the euro.

Angela Chen contributed to this article.

Corrections & Amplifications

An earlier version of this story misstated the previous quarter's earnings excluding one-time items.

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