09 July 2001 00:00 [Source: ICB]
US chemical giants Dow Chemical, Eastman Chemical and DuPont have reduced their forecasts for second quarter earnings in the light of the slump in demand.
Dow no longer expects to meet its previously stated estimate of 35 to 45 cent/share for the second quarter, but the company predicts that its earnings will be better than the underlying earnings of $502m in the first quarter.
Dow has been affected by high oil prices, but also by an unprecedented increase in prices of natural gas in North America in the first quarter.
Eastman Chemical anticipates that its earnings for the second quarter will fall short of those previously announced. The speciality chemicals company expects second quarter earnings/ share to be in the range of 53 to 57 cent before certain non-recurring charges. These charges are expected to be between $200m and $250m pre-tax and include a write-off of a prepaid asset related to the termination of a raw material supply agreement. It also includes the development of the hydrocarbon resins and rosin resins business acquired from Hercules in May this year.
DuPont has also warned that its second quarter profit could be less than half 2000 levels because of a sharp slowdown in the manufacturing sector.
This marks DuPont's second cautionary statement in two months. US-based exporters, many of whom are DuPont customers, are also suffering because of the strength of the dollar relative to other currencies, the company said. Shares fell by 2% after the announcement.
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Source: Companies, Thomson Financial, First Call
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