Dow Chemical Sinks on Disappointing Q2 Report

The Dow Chemical Co. (NYSE: DOW) traded more than 3% lower following the opening bell, after the company posted disappointing earnings and sales numbers earlier this morning.

Dow reported second-quarter adjusted earnings per share (EPS) of $0.55 and $14.5 billion in revenue. Adjusted EPS was sharply down from EPS of $0.84 in the same period a year ago, and revenue was also down from $16.05 billion a year ago. The results compare to the Thomson Reuters consensus estimates for EPS of $0.64 and $15.7 billion in revenue.

The chemicals and materials company had this to say about its outlook for the second half of the year:

[T]he global macro environment is not improving at the rate previously anticipated, and we have structured our business plans accordingly. In the midst of this challenging and volatile environment, we will accelerate our cost reduction and efficiency programs to meet these conditions head on.

The consensus estimate for third-quarter EPS is $0.63 and the full-year estimated EPS is $2.46.

The company’s chairman and CEO noted:

Sustained uncertainty in the world economy continues to present a challenging operating environment, and this quarter was no exception. Weak demand due to a slowdown in global growth drove declining prices. This, coupled with an unusually high turnaround season for Dow and a large currency effect, pressured margins in the quarter.

Dow’s sales decline was worst in Europe, where sales fell 10%, primarily due to the effect of currency exchanges, which cost the company $400 million. Sales volumes also declined by 5% in Europe and global prices declined by a similar amount. The bright spot was the company’s agricultural sciences division, where sales grew by 12% to $1.7 billion.

Shares were down to $29.12 in morning trading. The 52-week range is $20.61 to $36.90. Thomson Reuters had a consensus analyst price target of $36.31 before today’s results were announced.

Paul Ausick