April 25 (Reuters) - Chemicals maker Dow (DOW.N), opens new tab forecast second-quarter sales below estimates on Thursday amid weak demand in Europe.
Europe's manufacturing activity continued its decline during the first quarter, while retail sales in Germany, the region's largest economy, also fell unexpectedly in February.
The company said despite a decline in inventory levels, underlying demand remains weak in the European Union.
Dow forecast second-quarter sales of about $11 billion, below Wall Street estimates of $11.64 billion, according to LSEG data.
The company's shares fell marginally in premarket trading.
Dow's net sales declined by 9% to $10.77 billion in the first quarter, hurt by a 10% fall in local prices, but topped expectations of $10.74 billion.
However, an uptick in volumes and lower feedstock costs helped the company to beat profit estimates.
China's manufacturing activity expanded for the first time in six months in March while U.S. manufacturing grew for the first time in about 18 months, benefiting Dow, whose products are used in a range of industries.
The company said volumes rose 1%, supported by all regions except Europe, the Middle East, Africa and India, while low prices of natural gas, a key feedstock for chemical firms, boosted its margins.
Sales in its largest segment, packaging and specialty plastics, fell 11% to $5.43 billion, hurt by a decline in prices.
Chemical firms had raised their prices in 2022 to tackle inflation after Russia's invasion of Ukraine tightened feedstock supplies.
"In the near-term, demand in key end-markets from packaging and mobility to energy applications are trending sequentially higher," Jim Fitterling, chief executive officer of Dow, said in a statement.
The Midland, Michigan-based company reported operating earnings per share of 56 cents for the quarter ended March 31, compared with the average analyst estimate of 45 cents.
Reporting by Sourasis Bose in Bengaluru; Editing by Maju Samuel
