the chemical giant dow turned in results that were in line with wall street expectations but well below recent quarters as the european energy situation raised prices destroyed demand and left operating assets idle for longer than is practical it’s another sign that europe’s economy is struggling thursday morning dow ticker dow reported a thirdquarter operating profit of 12 billion and 111 in pershare earnings from 141 billion in sales wall street was looking for 11 billion in operating profit and 108 a share from 132 billion in sales remember that although sales were higher than analysts had penciled in sales don’t matter as much in the commodity chemical business because sales and costs are linked to energy prices earnings matter more higher costs and lower production volumes hit results dow earned an operating profit of 24 billion and 231 a share in the second quarter of 2022 part of the problem is that dow makes a lot of products out of natural gas and gas prices are up 20fold in certain areas due to restricted supplies from russia higher input costs result in higher product prices which affect customers’ willingness to buy things european sales volume fell 12 year over year in the third quarter and when people aren’t buying things production assets don’t get used dow’s operations in europe operated at less than 70 of capacity in the quarter that means less revenue to offset a lot of fixed costs things aren’t easy “we are proactively navigating the headwinds” dow cfo howard ungerleider told barron’s he highlighted dow’s ability to generate strong cash flow in tough times cash from operations rose to 194 billion from 186 billion in the second quarter the coming winter could mean even higher energy prices and lower production to address potential energy shortfalls europeans have been working to conserve natural gas and to put it in storage ungerleider says that the outlook for production in winter is better than it was a few months back but output cuts are still possible what’s more it is making more sense to import chemicals from asia into europe at current prices which puts additional pressure on europeanbased chemical production europe will need an “all in energy policy” says ungerleider using all sources of natural gas—lng domestic and russian supplies—as well as wind solar and nuclear power dow itself is working with a partner to build liquefied natural gas capacity that should be operational around 2025 in the long run things should return to some approximation of normal but for the coming few quarters dow and every other business in europe will be managing through energyrelated headwinds dow stock was down about 25 in premarket trading sp 500 and dow jones industrial average futures are up 01 and 03 respectively coming into thursday trading dow stock had fallen about 20 so far this year similar to the drop of the broader market