Dow Chemical Q2 op profit falls 2% to $1.4bn

26 July 2007 13:21  [Source: ICIS news]

LONDON (ICIS news)--Dow Chemical Company's second-quarter operating profit dropped 2% to $1.437bn following a sharp decline in the basic chemicals, performance chemicals and performance plastics sectors, the company said on Thursday.

Group sales were 6% higher year on year and for the first time in the company’s history exceeded $13bn.

Dow said volumes had remained stable as sales were hit by the weak North American housing and automotive sectors. This coupled with increased energy and feedstock costs and planned maintenance on its Boehlen cracker in Germany for most of April hit the company’s operating performance.

Operating profits for the Basic Chemicals segment took the biggest hit, down 25% year-on-year.

The company said a drop in the price of caustic soda, price and volume declines for vinyl chloride monomer and a general drop in volumes in every region but Europe had affected profits.

Operating profits for Performance Chemicals were also down, dropping 19% to $294m.

Dow Chemical said although segment sales had increased by 5% year-on-year, Dow Latex volumes dropped as the coated paper and carpet industries were hit by increased competition. Demand for architectural coatings in North America was described as "sluggish"..

Operating profits for Performance Plastics were down 7% compared with the same quarter in 2006.

“In Dow Building Solutions, changes to European building regulations spurred strong demand for insulation materials across the region, although this was not sufficient to offset lower volumes in North America, where new housing construction continued to face a significant challenge,” Dow said.

However, operating profits in Agricultural Sciences were up 29% compared with the same period in 2006.

The company said segment volumes had increased by 11%, reflecting substantial improvements in North America, Asia Pacific, Europe and Latin America.

“Volume in Latin America was particularly strong, driven by continued recovery in Brazil, where solid demand in soybean and corn applications, coupled with growth in sugar cane and ethanol production and creative robust demand across across the product portfolio,” the company said.

Basic Plastics operating profits were also up, increasing 7% to $529m, as sales rose 6%.  Basic Plastics prices were up 7%, the company said.

By: Lucy Craymer
+44 20 8652 3214

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