Dow posts surprise Q1 profit on improved sales, expands European assets review

Audio By Carbonatix

Enlarge

(Reuters) -Dow Inc reported a surprise profit on Thursday as robust sales volumes helped offset the impact of lower prices and higher input costs, sending the chemicals firm’s shares up 2% in premarket trading.

Along with other chemicals firms, Dow has been struggling with higher feedstock and energy costs as well as weak demand for its products, especially in markets such as Europe.

The company, however, said it saw volume growth in all its segments and end markets, except Latin America.

“Despite ongoing macroeconomic challenges, Dow delivered a sixth consecutive quarter of year-over-year volume growth while taking actions to reduce costs and right-size capacity,” CEO Jim Fitterling said in a statement.

Dow has initiated several steps to help mitigate the impact of lackluster demand and margin pressures, including job cuts and a strategic review of some of its European assets.

It said on Thursday that it is expanding the scope of the review and has identified three initial assets – two in Germany and one in the UK – that it believes will require further action, including idling or complete shutdowns.

It expects to complete the review by the middle of the year, Dow said.

Quarterly net sales from its packaging and specialty plastics segment, its largest by revenue, fell 2% to $5.3 billion from a year ago, but volumes were up 4% year-over-year, primarily driven by higher licensing revenue and merchant hydrocarbon sales.

It posted a surprise profit of 2 cents on an adjusted basis. Analysts had expected an adjusted loss of 1 cent per share, according to data compiled by LSEG.

(Reporting by Mrinalika Roy in Bengaluru; Editing by Pooja Desai)