Dow Chemical Struggles as Dollar Gets Stronger in the Second Quarter
Published By : 04 Aug 2015 | Published By : QYRESEARCH
The strong dollar has negatively impacted the sales of chemical companies in U.S. The second quarter of 2015 gave several reasons to executives of chemical companies to complain about. For instance, Eastman Chemical reported lower sales figure as compared to the same quarter last year. The grim figures are attributable to the growing strength of the dollar, lower prices of certain products, weaker agriculture markets, and the subsequent drop in prices of energy costs and raw materials. The only ray of hope came from demand for performance materials and the cost-cutting efforts put in by companies.
Dow Chemical reported a drop in sales of over 13% to USD 12.9 billion. However, the earnings witnessed a rise of 19.1%, reaching a figure USD 1.1 billion. Laurence Alexander, an official of investment bank Jefferies wrote, the weak crop prices and poor demand the agriculture market has led to decrease in 2% of volume and 6% of prices for Dow. He further added that the strong construction, consumer goods, and transportation markets has helped in balancing the overall performance.
Though the revenue dropped, Dow experienced a strong demand for performance plastics. This segment witnessed a rise of 9% as compared same quarter last year. On the other hand, materials and chemicals segment witnessed a positive growth of 4%. In a conference call with analysts, Dow CEO Andrew N. Liveris, DOW CEO stated that the consumers have assisted in driving the demand as they had a decent cash flow due to low gas prices. The strong auto manufacturing sector and the generous budgeting for infrastructure such as water treatment units also led to strong sales.