By Pooja Menon (Reuters) -Dow Inc halved its dividend and forecast third-quarter revenue below analysts’ expectations as the chemicals maker grapples with a prolonged industry downturn and tariff uncertainty, sending its shares down over 16% in early trading. Global chemical companies are feeling the pressure of higher production costs in Europe, lackluster demand and stringent […]
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Dow forecasts sales below estimates, slashes dividend on downturn, tariff uncertainty
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By Pooja Menon
(Reuters) -Dow Inc halved its dividend and forecast third-quarter revenue below analysts’ expectations as the chemicals maker grapples with a prolonged industry downturn and tariff uncertainty, sending its shares down over 16% in early trading.
Global chemical companies are feeling the pressure of higher production costs in Europe, lackluster demand and stringent environmental regulations.
Earlier this month, Dow said it would shut down three upstream plants in Europe and cut around 800 jobs in response to structural challenges in the region. It began a strategic review of some of its European assets in 2024.
Quarterly net sales from the company’s packaging and specialty plastics segment, its largest by revenue, fell 8.9% to $5.03 billion from a year earlier, weighed down by tariff uncertainties.
In a post-earnings call, Dow executives said the ongoing tariff and geopolitical uncertainty have impacted demand patterns, especially in the industrial infrastructure and durable goods sectors.
“With a considerable uncertainty that so many markets are facing, making any projections right now is especially challenging … we will share timely updates as appropriate,” CFO Jeff Tate said during the earnings call.
Dow declared a quarterly dividend of 35 cents per share. That compares with 70 cents per share announced in April.
“With this adjustment, we are aligning the payout size to provide additional financial flexibility,” CEO Jim Fitterling said in a statement.
“We view this move as unsurprising, since dividend pressure was clearly mounting with a yield near ~10% at times,” Vertical Research Partners analyst Kevin McCarthy said.
Dow expects third-quarter net sales of $10.2 billion, below analysts’ average estimate of $10.6 billion, according to data compiled by LSEG.
European rival BASF also cut its full-year outlook earlier this month, citing weaker-than-expected global economic growth and reduced demand for its chemicals due to U.S. tariffs.
Michigan-based Dow reported an adjusted loss of 42 cents per share for the second quarter ended June 30, compared with analysts’ average estimate of a loss of 17 cents per share.
Shares were trading down at a more than three-month low of $25.44, taking the year-to-date decline to 36.6%.
(Reporting by Pooja Menon in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)