© Reuters. FILE PHOTO: The Dow Chemical logo is displayed on a board above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S. on December 22, 2015. REUTERS/Lucas Jackson/File Photo
By Saikeerthi .
(Reuters) -Dow on Thursday forecast sequentially flat sales for the current quarter after reporting a 10.4% drop for the fourth quarter, as persistently weak demand plagues the chemical maker’s operating segments.
Chemical companies experienced a lackluster 2023 as they struggled to offload inventory amid a slowdown in demand in major markets such as the UK and China, where a recovery from the COVID-19 pandemic has been weaker than expected.
Softness in industrial and durable goods demand is expected to spill into the first quarter of 2024, Dow CEO Jim Fitterling said, but the company expects to see early positive signals in areas including construction, automotive and consumer electronics.
The Midland-based company said destocking, the process of offloading excess inventory, was coming to an end.
“The destocking that began in late 2022 has largely run its course, resulting in low inventory levels throughout most of our value chains,” said Dow CFO Jeffrey Tate.
But demand remains a sticking point as the chemical giant reported lower net sales across all reporting segments.
Packaging (NYSE:) and Specialty chemicals, Dow’s biggest segment in terms of sales, reported a 7% drop in net sales due to lower polyethylene prices globally.
The company said it expects prices of polyethylene, a material used in industries ranging from packaging to construction, to remain flat sequentially in the current quarter.
However, Dow beat market expectations for its fourth-quarter profit and sales, sending shares up 2.1%.
It reported adjusted profit of 43 cents per share for the three months ended Dec. 31, beating analysts’ estimates of 40 cents, according to LSEG data.