Dow Chemical Company Review of European Assets

(Reuters) – Chemical company Dow announced on Thursday that it has initiated a review of some of its European assets, despite reporting a third-quarter profit that exceeded expectations due to increased demand in North America for industrial products like polyethylene, which is used in packaging.

Dow explained that the review was prompted by weak demand recovery and competitive regulatory policies. Consequently, its shares increased by 1.7% to $52.37 in pre-market trading.

The review will primarily concentrate on assets within its polyurethane business, according to CEO Jim Fitterling. Dow aims to complete the review by mid-2025.

The decline in prices and volumes in the polyurethane sector contributed to the underperformance of its industrial intermediates and infrastructure segment, leading to a 2% drop in net sales.

The company indicated that overall demand in Europe and China remained subdued. "Meaningful recovery has yet to materialize in Europe and China. Moreover, Europe's regulatory environment has introduced growing challenges across numerous sectors and value chains," Fitterling stated.

In the third quarter, net sales from Dow's packaging and specialty plastics segment—the largest by revenue—rose by 1.1% to $5.52 billion, primarily due to increased polyethylene sales for industrial, consumer, and flexible food packaging.

Overall quarterly revenue climbed 1.4% to $10.88 billion, despite operational impacts from Storm Beryl, with analysts having anticipated $10.65 billion.

Dow also announced a strategy to reduce exposure to low-value merchant orders by planning to shut down its Freeport unit in 2025, which represents about 20% of North America's industry capacity.

Additionally, its adjusted profit of 47 cents per share surpassed market expectations by a cent, as per data compiled by LSEG.