Dow Inc cuts 2019 spending forecast due to trade friction, posts profit beat

U.S. chemical company Dow posted a better-than-expected quarterly profit on Thursday, and cut its spending for the year by 25% against the backdrop of prolonged trade tensions.

Chemical companies have been struggling with uncertainty caused by trade conflicts, weak global demand as well as lower prices for ethylene and polyethylene due to higher supply from the United States, China, Korea, and Thailand.

“Looking ahead, we still see global growth, but the pace of that expansion has slowed, as buying patterns remain cautious due to ongoing trade and geopolitical uncertainties,” Chief Executive Officer Jim Fitterling said in a statement.

The company said it would spend only $2 billion in 2019, $500 million less than its previous forecast.

Early in July, German chemicals giant BASF forecast a 30% fall in 2019 operating profit instead of a rise as previously predicted, blaming a slowing economy and the U.S.-China trade tiff.

Dow, which makes chemicals used in paints, cosmetics and cleaners, said costs controls as well higher volumes in its packaging and specialty plastics business helped earnings beat estimates.

Net operating profit, which excludes certain items, stood at $649 million, or 86 cents per share, in the second quarter ended June 30.

Analysts on average had expected a profit of 84 cents per share.

Net sales fell to $11.01 billion from $12.85 billion, a year earlier.