Dow Inc Forecasts Below-Expectation Q4 Sales Amidst Market Challenges

Dow's woes were underscored by a 7% sequential drop in product prices across Europe, the Middle East, Africa, and India.

Dow Inc (DOW.N) provided a cautious outlook for its net sales in the current quarter, falling short of analyst expectations due to persistent challenges in key markets characterized by weak demand and low prices for its chemical products.

The chemical industry had foreseen potential headwinds in the latter half of the year, primarily stemming from China’s slower-than-expected recovery following the pandemic and reduced demand in Europe.

Dow’s woes were underscored by a 7% sequential drop in product prices across Europe, the Middle East, Africa, and India.

This decline was attributed mainly to lower feedstock and energy costs.

Dow anticipates its net sales for the fourth quarter to fall within the range of $10.0 billion to $10.5 billion, with the midpoint below the consensus estimate of $10.48 billion among analysts, according to LSEG data.

However, the company is optimistic about the potential benefits stemming from increasing oil prices in the coming quarters.

As crude oil prices rise, products like polyethylene, poly vinyl chloride, and other base metals tend to see price increases.

James Fitterling, Dow’s CEO, expressed hope for a more favorable outlook in 2024 as inflationary pressures ease.

He mentioned that the company has identified strengths in areas like telecommunications and automotive data centers, even amid ongoing UAW strikes. Dow expects demand to rebound once agreements are reached among all parties involved.

Dow’s adjusted profit for the quarter ending September 30 was 48 cents per share, surpassing analysts’ average estimate of 44 cents per share.

This positive earnings surprise spurred a 1.8% increase in the company’s shares during early trading.

In an additional development, Dow announced the retirement of its long-serving Chief Financial Officer, Howard Ungerleider, after 33 years with the company.

Jeffrey Tate is set to take over as the new CFO, effective November 1.

In conclusion, Dow Inc faces ongoing challenges in its key markets, but it remains cautiously optimistic about future prospects, especially as oil prices rise.

The company’s ability to adapt to changing market conditions and capitalize on emerging opportunities will be critical to its performance in the coming quarters.