Karen Carter took over as CEO of Dow Inc. on July 1, stepping into the top role at a company navigating financial losses, a sweeping corporate restructuring, thousands of layoffs, and the closure of several European plants. More than three decades after first joining Dow as an intern, Carter is now leading the nearly 130-year-old manufacturer—the largest chemicals company in the Americas and one of the largest globally—through a pivotal transformation.

Carter had a hand in shaping the challenges she inherited. She helped design and implement Dow's "transform to outperform" strategy, which was announced in January.

"There's a saying that it's a blessing to be stressed by the thing you prayed for and hoped for," Carter told Fortune. "This is really a privilege and an honor to be leading this company in such a time of change."

Her appointment marks a milestone: Carter is both the first woman and the first Black CEO in the company's history—a notable breakthrough in an industry where executive leadership has historically lacked diversity, particularly at the largest publicly traded chemical and petrochemical firms.

Strong Quarterly Results Amid Geopolitical Volatility

Last week, Carter presided over her first earnings report as CEO, and the results were striking. Boosted by widening North American petrochemical profit margins driven by the Iran war and elevated oil prices, Dow posted its most profitable quarter in four years. The company reported net income of $802 million and a 20% increase in net sales.

The chemical sector is among the most cyclical of major industries, closely tracking construction, automotive, consumer packaging, and industrial manufacturing demand. That cyclicality means quarterly swings like Dow's latest results can reflect geopolitical shocks as much as underlying operational improvements—a dynamic investors weigh when evaluating whether gains are sustainable.

"It's been a long time since we posted a quarter like this," Carter said. "We anticipate that we'll continue to be in a bit of a volatile environment. But we remain committed to what we said we were going to do, which is execute on our self-help and maximize the [third] quarter based on the market fundamentals."

Despite the robust results, Dow's share price dipped slightly, reflecting the company's cautious forward guidance. Carter attributed the conservative outlook to ongoing uncertainty in the Middle East and resulting global supply chain disruptions. She expressed confidence that Dow could exceed its guidance, benefiting both shareholders and customers.

Geographic Advantage in the Americas

Carter, 55, a native of Wichita, Kansas, faces a complex global landscape. Oil and gas tensions centered on the Strait of Hormuz are disrupting petrochemical supply chains, with knock-on effects across plastics packaging, construction materials, data center components, and pharmaceutical ingredients.

There are downsides: Dow's Saudi Arabia joint venture plant remains mothballed, and the company is closing economically uncompetitive facilities in the United Kingdom and Germany.

However, approximately 60% of Dow's manufacturing footprint is located in the Americas, where plants are reaping substantially higher profit margins. The advantage stems from feedstock economics—a structural shift that dates to the mid-2000s shale gas revolution, which transformed North America from a high-cost chemical producer into one of the world's lowest-cost regions. Most Asian and European chemical plants rely on crude oil-based naphtha, which has surged in price. North American plants, by contrast, use cheap and abundant ethane and propane sourced domestically from shale natural gas formations.

"Our footprint is advantaged on the ethylene and polyethylene side because it is based on ethane, where that price has remained pretty stable," Carter said, referring to the world's most widely used plastics. "For much of the rest of our portfolio, we continue to lean into those higher-value and higher-growth applications, like data centers."

Much of Dow's recent growth is concentrated in North America, spanning operations from Freeport, Texas, south of Houston, to a $7.5 billion net-zero petrochemical project currently under construction in Fort Saskatchewan, Alberta. That Alberta project positions Dow among a growing cohort of chemical producers investing in lower-carbon production capacity as regulatory and investor pressure intensifies around industrial emissions.

Turnaround Effort Gains Momentum

Beyond favorable margins, Carter credited Dow's internal turnaround program for the rapid financial improvement. The transformation is proceeding on schedule, even though profits recovered faster than expected.

Dow and the broader chemical industry weathered a prolonged downturn in recent years, likely bottoming out in 2025, following a global oversupply of base chemicals and plastics. Dow posted an annual loss of approximately $1.5 billion last year and began 2026 with a $445 million quarterly net income loss.

In response, Dow committed to cutting 4,500 jobs—a process now 55% complete—alongside broader cost reductions, efficiency improvements, and selected plant closures, while continuing to invest strategically in growth areas such as Canada.

"There are some things that we have to change," Carter said. "We have to be more agile; we have to be more resilient; we need to be leaner as we go forward. That's why the transformation work is so important. And it's not just about cost cutting. It is two-thirds productivity and one-third growth. Fundamentally, this work is about making the company more competitive as we move forward."

"Job reductions are for sure part of it, but it's about changing the work before we change the workforce," she added.

Former CEO Jim Fitterling stepped down from the chief executive role but remains executive chairman, having elevated Carter to succeed him.

Growth in Data Centers and Pharmaceuticals

As part of its leaner operating model, Dow is increasing its reliance on AI and automation. The company is also expanding into the booming AI data center market. In May, Dow launched its Dow Coolant Care Network, designed to help data centers maintain cooling and energy efficiency using the DowFrost thermal management product and related technologies, Carter said.

The move reflects a broader industry trend in which commodity chemical producers are pushing into specialty and higher-margin segments to reduce vulnerability to raw-material price cycles.

On the pharmaceutical side, Dow is capitalizing on another major economic trend: the surge in GLP-1 weight management medications. The company is benefiting from increased downstream demand, as GLP-1 use has driven higher consumption of laxatives. Dow manufactures key laxative components that are showing significant gains.

"One of the side effects—maybe you wouldn't want to put this in an article—requires some people that are on GLP-1s to use MiraLAX as an example," Carter said with a laugh, signaling her optimism about continued growth in this segment.

Core Business and Global Demand

The largest profits, however, continue to come from the core of Dow's business: plastics, packaging, and margin expansion. While higher plastics costs may contribute modestly to inflation, including in grocery prices, Carter said global demand remains resilient.

"If you think about food packaging, it's less than 10% of the total cost. So it's hard to tell whether that package of cookies is going to be much more expensive. It's not one-to-one like it is for gasoline," Carter said. "The demand is relatively stable. Even if the economy is not that great, and people may be downshifting to private labels from branded labels, we sell into both."

Previous industry forecasts had projected the chemical sector downturn persisting through 2026, with the global plastics glut not fully resolved until 2030, Carter noted. However, unprofitable plants in Europe and Asia are being closed faster than anticipated, and planned Middle Eastern expansions may face delays and prolonged outages. As a result, the potential upside is materializing more quickly than the current profit spike alone would suggest.

Reflecting on the road ahead, Carter remained optimistic: "I'm super excited about the possibilities of this company moving forward."