Why Dow Chemical Saw Robust Revenue Growth in 2Q17
Dow Chemical’s 2Q17 revenue
Dow Chemical (DOW) reported revenue of $13.8 billion in 2Q17, an increase of 15.7% on a year-over-year basis. In 2Q16, DOW reported revenue of $12.0 billion. DOW managed to beat analysts’ revenue estimate of $13.6 billion.
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DOW’s revenue growth in 2Q17 was primarily driven by the addition of the DOW-Corning silicones business, which wasn’t there in 2Q16. DOW took over the remaining stake in the joint venture between Dow Chemical and Corning (GLW) in June 2016. Excluding revenues from this stake, DOW’s revenue grew by 8% organically. Sales grew across all the reporting segments with the highest growth of 13% coming from the Performance Materials and Chemicals segment, followed by 8% growth in the Performance Plastics and Consumer Solutions segment. We’ll discuss the performance of each reporting segment in the next few parts.
Geographically, the EMEAI region saw 12% growth, Asia-Pacific saw 8% growth, and North America saw 7% growth.
Management comments on DuPont merger
Andrew Liveris, Dow Chemical’s chair and CEO, said, “we ended the quarter on the cusp of delivering the most comprehensive slate of growth investments in our industry – across the U.S. Gulf Coast, at our Sadara joint venture and through the ongoing integration of our silicones platform. And we made significant advancements toward our historic merger with DuPont (DD), which will enhance our leadership as the world’s premier materials science company.”
Investors can indirectly hold Dow Chemical by investing in the Materials Select Sector SPDR Fund (XLB), which invests 12.0% of its portfolio in DOW. This fund also invests in Monsanto (MON), which has a weight of 8.3% as of July 27, 2017.
In the next part, we’ll look into the performance of DOW’s Agriculture segment in 2Q17.