Dow Inc. (DOW) - Get Report posted a sharp decline in first-quarter profit in its first update following the spinoff from DowDuPont (DWDP) - Get Report and its inclusion in the Dow Jones Industrial Average earlier this year.
Dow said earnings for the three months ending in March fell 24.4% from the same period last year to $1.92 billion, in-line with the company's previous guidance. Group sales, however, fell 10% to $10.8 billion and topped the Street consensus forecast of $10.68 billion.
Dow said second quarter headwinds, including maintenance costs, would be around $200 million higher than last year, but noted that rising oil prices would be "constructive" for group earnings as the year progresses. Dow also said it has around $400 million in cost savings -- as well as $200 million in stranded costs removal -- to realize following its April spinoff from DowDuPont.
"We successfully separated from DowDuPont on April 1, and are moving forward as the new Dow - a materials science leader well positioned to operate more productively, invest more prudently, grow more profitably and deliver higher returns to shareholders," said CEO Jim Fitterling. "In the quarter, Dow showed its resilience. We achieved demand growth in differentiated silicones, polyurethane systems and packaging. We also continued to streamline our cost structure, delivering more than $125 million of cost synergies in the quarter and reaching a $1.365 billion cost synergy run-rate."
"We have nearly $400 million of additional cost synergy savings to deliver, as well as more than $200 million of remaining stranded cost removal, as separation of all three DowDuPont divisions is completed," he added. "These operational levers helped us moderate the impact of margin compression and discrete headwinds in our intermediate products."
Dow shares were down 0.9% on Thursday at $55.63.