Dow, the chemicals and plastics group that has just returned to the stock market as an independent company, is hoping for a trade deal between the US and China to “drive momentum” in demand, its chief executive has said.
The company, which was spun off from DowDuPont last month, has been hit by a steep fall in prices for many products following a surge in production across the industry.
Profits before interest and taxation for the business in the first quarter, the last before Dow became an independent company, were down 34 per cent at $1.23bn.
Sales volumes were up 1 per cent from the first quarter of 2018, but that was offset by a 9 per cent drop in average prices.
Jim Fitterling, chief executive, said consumer demand was strong, but sales to the car industry were weak in Europe and just “OK” in the US and China.
Prices were stabilising and showing signs of slight increases, and inventories, which had been building up, had levelled off towards the end of the first quarter, he said. Resolution of the trade dispute between the US and China could have a significant impact in helping market sentiment and boosting demand in the second half of the year, Mr Fitterling said.
DowDupont reported a 25 per cent drop in underlying earnings for the first quarter, hit by the weakness of Dow and the impact of bad weather on its agricultural chemical business.
Earnings per share were 84 cents, excluding one-off items and the amortisation of intangible assets, slightly below the average of analysts’ forecasts for 85 cents, according to Refinitiv. The company had warned in March that its sales and earnings for the quarter would be down sharply.
Sales were down 9 per cent at $19.6bn, hit by lower selling prices and the strength of the US dollar.
The company said it expected many of its businesses would rebound in the second half of the year.
The agriculture business, which is set to be spun off as a separate company called Corteva on June 1, was hit by flooding in the US that delayed planting, hurting demand for seeds and crop protection chemicals.
The company said it expected to reverse the decline “through realisation of price and volume opportunities on high demand products”, new product launches and accelerated cost reductions.
The speciality chemicals business, which is going to be called DuPont, is also projected to rebound later in the year, with slow markets for its products continuing in the second quarter, but an “expected recovery of automotive and smartphone demand in the second half”.