Dow, BASF earnings surge in the second quarter

Early results from two of the world’s largest chemical companies indicate that the industry is rebounding strongly from the COVID-19 pandemic and should maintain momentum for the rest of the year.

Dow is the first major chemical firm to post full second-quarter results. The company’s sales vaulted 66.2% versus the same quarter last year, the quarter most impacted by the pandemic lockdowns. Earnings for the period hit $2.1 billion, versus a loss of $189 million in 2020. Sales increased 42.2% in the first half of 2021, while earnings increased 1,134.0%.

BASF, the world’s largest chemical maker, posted preliminary results. Its sales increased by 55.8% in the second quarter and 33.0% in the first half. Earnings before taxes increased 942.0% in the quarter and 22.8% in the first 6 months.

In a conference call with analysts on July 22, Dow CEO Jim Fitterling boasted of the “strongest quarterly earnings performance in the company’s history.”

Dow’s largest segment, packaging and specialty plastics, saw a 78% sales increase during the quarter, mostly due to higher prices and strong performance in its petrochemical unit. Plastics sales volumes actually declined somewhat due to the lingering effects of the February freeze in Texas and planned plant maintenance. Dow’s other businesses, such as coating materials and polyurethanes, also posted strong gains.

Howard Ungerleider, Dow’s chief financial officer, said the stage is set for continued improvement this year. “Strong consumer-demand trends continue in retail, housing, and the manufacturing sectors, and inventory levels remain low across most of our value chains,” he said.

“As vaccination rates increase around the world and economies continue to reopen, pent-up consumer demand and increased personal savings built over the past year should also provide an additional boost to the global economy,” Ungerleider added. For example, with people getting out more, Dow is seeing increased demand for chemicals that go into personal care and cosmetic products.

BASF raised its expectations for the year. It expects its full-year sales will reach $87 billion to $90 billion, up from its original expectation of $80 billion to $84 billion. This is because the company is assuming that the world economy will grow 5.5% this year, up from its previous assumption of 5.0%, and that chemical output will increase 6.5% instead of 5.0%.