Dow's Second-Quarter Sales Forecast Falls Short of Expectations
Chemicals giant Dow Inc. has projected second-quarter sales below analysts' expectations, citing weak demand for consumer durables and ongoing concerns about the European economy. This news comes amidst a backdrop of declining retail sales in Germany and a broader slump in European manufacturing activity.
Dow's Chief Financial Officer, Jeffrey Tate, acknowledged the muted demand for consumer durables but expressed optimism about margin expansion in Europe's industrial intermediates and infrastructure segment. The company anticipates second-quarter sales of approximately $11 billion, exceeding the first quarter but falling short of Wall Street's $11.64 billion estimate.
Analysts remain divided on Dow's prospects. While some see a marginally more constructive market outlook, others express concerns about the lack of significant free cash flow generation. Dow's stock price dipped by 1.5% amidst broader market declines.
Despite a 9% decline in net sales during the first quarter, Dow managed to surpass profit estimates. This was attributed to an uptick in volumes and lower feedstock costs, particularly natural gas. The company reported a 1% increase in volumes across all regions except Europe, the Middle East, Africa, and India.
Dow CEO Jim Fitterling expressed optimism about the near-term, citing sequentially higher demand trends in key end-markets such as packaging, mobility, and energy applications. The company reported operating earnings per share of 56 cents for the quarter ended March 31, exceeding the average analyst estimate of 45 cents.