Sales in the plastics business rose 13% while EBIT fell 9%

Sales in the plastics business rose 13% while EBIT fell 9%

Dow Chemical has given a clear indication of the rising cost of feedstock and energy in its third quarter results this week.

Investor Relations director Kathleen Fothergill said: “While purchased feedstock and energy costs have come down from the first-quarter peak levels, they were still up by more than 20% compared with the third quarter of last year and remain extremely volatile”

Referring to geographical variations, she said US Gulf Coast natural gas and ethane were more than 50% higher than a year ago while Brent crude in Europe was up just 6% on average and naphtha 18%.

Chief financial officer Pedro Reinhard highlighted the cost impact on Dow’s plastics business where a 13% sales rise to $1.1bn (E940m) was accompanied by a drop in EBIT of 9% to $155m (E133m). “Lower equity earnings were recorded from DuPont Dow Elastomers which was also affected by higher feedstock and energy costs,” he said.

Polyethylene sales were up significantly from the third quarter of last year while PP sales were up by 7%. Dow’s Performance Plastics business showed a marked improvement with EBIT up 40% to $199m (E170m), led by the polyurethanes and Fabricated Products business, Reinhard said.
· Meanwhile at BP, the newly renamed Chemicals arm, now known as BP Petrochemicals, also suffered from higher feedstock prices in the third quarter. As a result, replacement cost operating profit, including special items, was down by $184m (E157m) from the previous three months to $124m (E106m), the group’s results showed this week.