(Reuters) - Dow Chemical Co (>> The Dow Chemical Company) will consider selling its paint, construction and chlorine businesses as it joins industry rivals in shedding units vulnerable to commodity price swings, its chief executive said.

Dow, the largest U.S. chemical maker by sales, reported a better-than-expected quarterly profit on Thursday due to strong margins in its plastics business and higher sales of pesticides to farmers. Its shares rose 1.5 percent in morning trading.

Like competitor DuPont (>> E I Du Pont De Nemours And Co), the company is pushing hard into the agricultural sector, where sales have been booming on year-round demand for seeds and pesticides for the crops needed to feed an expanding global population.

DuPont said on Tuesday that it planned to exit its titanium paint pigments business to focus on its agricultural unit, where higher sales helped to boost quarterly profit.

Dow Chemical has already divested non-core businesses worth about $8 billion in revenue since 2009, and plans this year to close the previously announced sale of its polypropylene licensing and catalyst business and its plastics additives unit.

"One-third of our business is in low-cost commodity, cyclical-type business, where my competition is state-owned enterprises," Dow Chemical Chief Executive Andrew Liveris said in an interview with CNBC on Thursday.

"My competition is racing to commoditize my products. That means I have to keep working them out of the portfolio and keep moving to areas of high-margin, high-technology."

On a post-earnings conference call with analysts, Liveris identified the company's Epoxy, or industrial paint, business as a candidate for divestment, as well its European building and construction and commodity chlorine derivatives units.

"Here, we see the need for more dramatic interventions," he said. "These businesses are in the fix/take-action mode, which includes exploring all possibilities - including joint venturing or divesting them."

Dow Chemical spokeswoman Rebecca Bentley said the three businesses combined contributed $6 billion in annual revenue.

Some analysts, however, urged caution.

"Dow has to be careful with how much of the commodity business it offloads, given that is what is generating their margin upside," said Stephen Hoedt, a senior equity research analyst with Key Private Bank.

FARMS GROWING FAST

Of Dow Chemical's six operating units, growth was fastest in the agricultural business that makes seeds, oils and chemicals to protect crops. Sales jumped 10 percent in the second quarter.

A steady climb in U.S. farm income has increased demand for biotech seeds and pesticides. Dow Chemical's agriculture sciences business, which contributed 13 percent of revenue in the quarter, also gained from strong demand in Latin America.

The company's performance plastics unit, which makes products for toy manufacturers, builders and carmakers, remained its largest business, accounting for nearly a quarter of total sales. Margins grew for a sixth straight quarter.

Dow Chemical said it was well-positioned to deliver higher earnings in the second half of the year.

The company expects its earnings before interest, taxes, depreciation and amortization to grow by $500 million this year, Chief Financial Officer William Weideman said on the call.

Dow Chemical reported EBITDA of $5.6 billion, or $7.5 billion on an adjusted basis, in 2012.

Weideman said the performance plastics business was expected to grow through 2013. Margins for U.S. chemical companies have improved vastly due to cheap, shale-derived natural gas, used to produce ethylene, a building block for plastics.

Dow Chemical's net income rose 72 percent to $2.34 billion, or $1.87 per share, in the second quarter, helped by the $2.2 billion received in damages from Kuwait's state chemicals company for pulling out of the K-Dow petrochemical venture in 2008.

Excluding the arbitration award and other one-time items, the company earned 64 cents per share.

Dow Chemical's shares were trading around $35 just after midday on the New York Stock Exchange.

(Editing by Saumyadeb Chakrabarty and Robin Paxton)

By Swetha Gopinath and Garima Goel