First-quarter sales at Dow (Midland, Michigan, USA; www.dow.com) fell 9% year-on-year to USD 10.8 bn (EUR 10.09 bn) but profit margins expanded as the company held onto its pricing and benefited from lower feedstock costs.

Profitability growth was led by the company’s Packaging & Specialty Plastics as well as its Performance Materials & Coatings segments.

CEO Jim Fitterling pointed to the company’s cost-advantaged positions around the world, which he said led to higher operating rates. Dow last year launched a USD 1 bn cost-cutting programme that includes slashing jobs and plant closures.

Related: Dow Q2 2023 sales and profits fall

Net income swung to a profit of USD 538 mn from a loss of USD 73 mn in the same quarter last year, while operating EBITDA (earnings-before-interest-tax-depreciation-and-amortisation) rose slightly to USD 1.39 bn from USD 1.36 bn. Although operating EBIT shrank by USD 34 mn to USD 674 mn, the year-on-year profit margin managed to claw its way up to 6.3% from 6.0%.

Dow expects second-quarter revenues to be around USD 11 bn, a tad lower than the USD 11.42 bn turnover of last year’s second quarter, but still higher than the first quarter of this year.

CFO Jeffrey Tate told analysts that Dow is “cautiously optimistic” for the second quarter amidst signs of improving macroeconomic conditions in several regions. “That said, we are keeping a close eye on inflation, interest rates, and geopolitical tensions,” he said.

Dow expects sales at Packaging & Specialty Plastics – its biggest segment – to grow 2-4% during the second quarter compared with January-March this year on the back of resilient demand in packaging as well as continued strength in export volumes.

First-quarter revenue plunged 11% year-on-year and dipped 4% quarter-on-quarter to USD 5.43 bn. Operating EBIT contracted USD 37 mn year-on-year to USD 605 mn, but profitability expanded, as gleaned from the profit margin, which stood at 11.1% compared with 10.5%.

In the Industrial Intermediates & Infrastructure segment, first-quarter sales eased 11% year-on-year to USD 3 bn and operating EBIT dwindled by USD 36 mn to USD 87 mn. The margin weakened to 2.9% from 3.6%. In the second quarter, the company forecasts sales to be 1-2% higher than Q1 this year, driven by elevated MDI and polyols spreads in Europe. It expects challenges in consumer durables demand to remain.

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Dow said for the second quarter, it anticipates an improvement in siloxane prices as well as in building and construction end-markets, which could in part help boost quarter-on-quarter sales by 3-5% in its Performance Materials & Coatings segment. During the first quarter, sales here dropped 5% year-on-year to USD 2.15 bn, but jumped 14% quarter-on-quarter. The operating EBIT margin gained 40 basis points to 1.9% versus 1.5% in the year-earlier period.