Dow’s second quarter is better than its first

Blaming a stalling economy, Dow says earnings slipped in the second quarter from the same period a year ago. But the largest US chemical company says it made progress over the first quarter and notes signs that business conditions will improve.

Dow’s sales declined 4.4% from the year-ago quarter to $10.9 billion. Volume increased by 1%, but prices fell 4%. Earnings, excluding extraordinary items, dropped 10.2% to $482 million.

“The pace of the global economic recovery has decelerated slightly,” Dow’s chief financial officer, Jeffrey L. Tate, said in a July 25 conference call with analysts. “This was primarily led by China, where economic growth in the second quarter was lower than the market expected.”

In Dow’s largest business, Packaging and Specialty Plastics, sales fell 7% from a year ago due to lower volumes and lower prices, particularly in Asia. Sales in its Industrial Intermediates and Infrastructure segment dropped 7% despite a 1% increase in volume, driven by building activity. Sales rose 2% in Dow’s Performance Materials and Coatings segment.

On a sequential basis, Dow’s earnings look better. Compared with the first quarter of 2024, Dow’s sales increased by 1.4% and its earnings rose 22.3%.

“We are encouraged by the positive top-line signals across our portfolio,” CEO Jim Fitterling said on the call. For example, he said the market has absorbed a flood of new polyethylene capacity in North America. European plants with high operating costs are starting to close, tightening the market further, Fitterling noted.

“We expect third-quarter earnings to be slightly above second-quarter performance, continuing our string of sequential improvement,” Tate said.