July 25 (Reuters) - Dow missed second-quarter profit estimates on Thursday, hurt by lower demand and prices in Asia and Europe.
Manufacturing activity in the euro zone and China weakened in the quarter due to low demand as the economies navigated a high inflationary environment after the COVID-pandemic, resulting in a 4% drop in local prices of Dow's products in the key markets.
The company, however, expects pricing to improve in the current quarter, and profit margins in polyethylene and ethane to rise.
"We anticipate supply demand fundamentals in packaging & specialty plastics to continue improving...the beginning of an interest rate cutting cycle will accelerate demand in our polyurethanes business," said CEO James Fitterling.
Dow produces a vast range of chemicals and additives, including Polyurethanes, that are used in manufacturing a variety of end-products in the consumer, energy and automotive sectors.
"Our coatings business is highly correlated to existing home sales," and market demand for housing is expected to rise to pre-pandemic levels by next year, said Fitterling.
Dow expects to report third-quarter sales of about $11.1 billion, higher than $10.92 billion in the second quarter, but slightly below Wall Street estimates of $11.35 billion, according to LSEG data.
The company said it faced minimum disruptions at its Freeport plant in Texas from Hurricane Beryl in the third quarter.
Dow's outlook for the next three months and earnings for the reported quarter were "modestly below buy-side expectations, reflecting soft demand for commodity chemicals," said analysts at Keybanc Capital Markets.
Shares of the company were down 2.3% in early morning trading after the company reported operating earnings per share of 68 cents for the second quarter ended June 30, compared with LSEG estimate of 72 cents, and a bigger-than-expected fall in net sales.
Reporting by Seher Dareen in Bengaluru; Editing by Shinjini Ganguli
Source: Reuters