Dow Earnings Say the Global Economy Is Good, but Not Great -- Barrons.com

Al Root

Dow delivered a first-quarter earnings beat on Thursday. Shares were down in early trading because investors would prefer a stronger global economy.

The chemical giant reported earnings per share of 56 cents on sales of $10.8 billion. Wall Street was looking for earnings per share of 45 cents on sales of $10.7 billion, according to FactSet. A year ago, Dow reported earnings per share of 58 cents on sales of $11.9 billion.

Sales were down 9% year over year, but sales matter less in a commodity chemicals business than volumes and margins because product pricing is always tied to energy prices.

Overall volumes at Dow increased 1% year over year, and rose 1% from the fourth quarter of 2023. Operating-profit margins of 6.3%, increased 0.3 percentage points year over year. Operating margins in the fourth quarter came in at 5.3%.

The results look solid. Shares, however, are down 0.3% in early trading at $56.77. The market explains a lot of that drop. S&P 500 and Nasdaq Composite futures were down 0.7% and 1%, respectively.

Dow expects the global economy to grow by roughly 2.5% in 2024. That's good, but not great. It's down a little from the 2.7% global growth realized in 2023 and down from an average of about 2.8% annual growth for the past decade.

Volumes for chemical products should grow about 1 percentage point more than that. Chemical products typically grow a little faster than the overall economy.

Investors can expect some volume acceleration, from the 1% first-quarter growth, for Dow from here. That might help get shares out of their holding pattern.

Coming into Thursday trading, Dow stock was up about 4% year to date, and up about 4% over the past 12 months. The S&P 500 is up about 6% year to date, and up about 25% over the past 12 months.

Dow will discuss its results on a conference call set to start at 8 a.m. Eastern time.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 25, 2024 08:46 ET (12:46 GMT)

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