July 23 (Reuters) – Dow Inc beat Wall Street estimates for second-quarter adjusted profit on Thursday, helped by higher prices due to supply shocks from the Middle East conflict as well as cost cuts.
Shares of the chemicals company rose 2.4% in premarket trading.
Tensions surrounding the Strait of Hormuz following the escalation of the U.S.-Iran conflict have led to disruptions in oil and petrochemical flows, resulting in a tightening of global chemicals supply and a subsequent increase in prices of plastics and polymers.
Dow has also been reevaluating its ownership of non-product-producing assets across its global portfolio, including power and steam production and pipelines, as the chemical industry struggles with higher feedstock and energy costs, as well as weak demand in key end markets.
CEO Karen Carter said the company expects to generate about $200 million in additional benefits from the “Transform to Outperform” program this year, to increase the total in-year self-help initiatives to more than $1.3 billion.
Quarterly net sales from Dow’s packaging and specialty plastics segment rose 27% to $6.4 billion from a year earlier, driven by higher polyethylene prices in all regions.
Net sales at its industrial intermediates & infrastructure segment rose 14% to $3.2 billion and performance materials and coatings were up 11% to $2.4 billion from a year ago.
The Michigan-based company reported an adjusted profit of $1.44 per share for the quarter ended June 30. Analysts on average expected a profit of $1.28 per share, according to data compiled by LSEG.
(Reporting by Pooja Menon in Bengaluru; Editing by Joyjeet Das)
