C&EN: Dow has troubles in the second quarter

Echoing preliminary results from a handful of European chemical companies, Dow, the largest US chemical producer, has reported declines in both sales and earnings for the second quarter.

“We continued to navigate a challenging macroeconomic environment, with slow global growth in the second quarter,” Dow CEO Jim Fitterling said on a July 25 conference call with stock analysts.

Dow’s sales for the quarter declined 27% from the same period last year, and adjusted earnings dropped 68%.

Sales volumes were weak, slipping 8%. The company’s regional division that includes Europe led the decline with a 14% volume decrease. Product selling prices declined 18% due to soft demand and lower energy costs.

Dow suffered weakness across the board. Its largest business, packaging and specialty plastics, saw sales decline by 28% as ethylene and polyethylene prices dropped and sales volumes for olefins and aromatics decreased.

Dow’s industrial intermediates and infrastructure segment, which houses its polyurethane and construction chemical businesses, saw a 27% drop in sales due to weak demand from consumer durable and construction markets. Its performance chemicals and coatings segment posted a similar decline.

It's funny how it feels like folks are talking about a "soft landing" for the economy, but the weakness is showing up in the basic chemicals sector. I have no idea whether or not we'll have a recession in the next 18 months, but this seems like a leading indicator of "maybe yes."