Dow misses profit estimates on lower demand in Asia, Europe

(Reuters) -Chemicals maker Dow missed second-quarter profit estimates on Thursday, hurt by lower prices and demand in key markets including Asia and Europe.

Manufacturing activity in the euro zone and China weakened in the quarter, with China’s economic data in June showing indexes of raw material stocks in contractionary territory.

This resulted in a 4% drop in local prices of Dow products in key markets.

Dow produces a vast range of chemicals and additives that are used in manufacturing a variety of end-products in the consumer, agricultural and energy sector.

The company’s net sales fell 4% to $10.92 billion in the reported quarter, compared with estimates of $11 billion per LSEG data.

“The pace of the global macroeconomic recovery has been slower than expected. We remain focused on working capital, reducing costs, and matching our operating rates to current demand,” said chief executive officer Jim Fitterling.

Shares of the company were down 4.4% in premarket trading.

Analysts at RBC Capital Markets said earlier this month that while the company was through with destocking, demand remained soft, particularly in Europe.

“While near-term demand in many markets that we serve is growing, building & construction and consumer durables are unlikely to significantly change in 2024,” CEO added.

The Midland, Michigan-based company reported operating earnings per share of 68 cents for the quarter ended June 30, compared with the average analyst estimate of 72 cents, according to LSEG data.