Dow Inc.
CEO : Mr. James R. Fitterling
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | -27.1% YoY | -69.5% | -70.2% | 2023-07-25 |
Howard Ungerleider says,
Macroeconomic Environment
- Expect a challenging macroeconomic environment in Q3
- Inflation starting to moderate
- Slowdown of industrial economic activity globally
- US industrial activity remains weak, but consumer demand resilient
- Recessionary conditions persist in Europe
- China’s economic rebound has yet to fully materialize
Outlook for Q3
- Packaging and Specialty Plastics segment: Lower average prices and increased feedstock costs expected
- Industrial Intermediates and Infrastructure segment: Continued demand pressure in consumer durable end markets
- Performance Materials and Coatings segment: Price pressure in siloxanes and below normal seasonal demand
- Earnings expected to be down approximately $150 million sequentially
Financial and Operational Discipline
- On track to deliver $1 billion of cost savings in 2023
- Global workforce reduction program ongoing
- $300 million reduction in planned maintenance turnaround spending on track
- Continuing to execute actions to rationalize select higher cost, lower return assets
- Lowered cash commitments by approximately $1 billion since spin
- Annual net interest expense expected to be down more than 40% versus 2019
- No substantive debt maturities due until 2027
Jim Fitterling says,
Net Sales
- Net sales were $11.4 billion, down 27% year-over-year
- Sales were down 4% sequentially
- Volume decreased 8% year-over-year
- Volume increased 1% sequentially
- Local price decreased 18% year-over-year
- Local price decreased 5% sequentially
Operating EBIT
- Operating EBIT for the quarter was $885 million, down from $2.4 billion in the year ago period
- Operating EBIT increased $177 million sequentially
- In the Packaging and Specialty Plastics segment, operating EBIT was $918 million compared to $1.4 billion in the year ago period
- In the Industrial Intermediates and Infrastructure segment, operating EBIT was a loss of $35 million, compared to earnings of $426 million in the year ago period
- In the Performance Materials and Coatings segment, operating EBIT was $66 million compared to $561 million in the year ago period
Cash Flow
- Generated cash flow from operations of more than $1.3 billion, up more than $800 million versus the prior quarter
- Trailing 12-month cash flow conversion is 98%
Capital Allocation
- Returned $743 million to shareholders through dividends and share repurchases in the quarter
- Returned nearly $1.4 billion year to date
Outlook
- Challenging macroeconomic environment with slow global growth
- Continuing to implement proactive and targeted cost savings actions
- Strong financial position gives flexibility to advance long-term strategic priorities
Q & A sessions,
Decarbonizing Growth Strategy and Sustainability
- Expected increase in underlying earnings by $3 billion annually
- Target of reducing greenhouse gas emissions by 30% by 2030
- FCDH unit fully operational, ramping up rates, and reducing energy usage and emissions
- Submission of construction permit application for small modular nuclear energy facility
- Capital efficient approach to scale production of recycled and bio based products
- Expected commercialization of 3 million metric tons per year of circular and renewable solutions by 2030
Path to Zero Project
- Creation of world’s first net zero CO2 emissions ethylene and derivatives complex
- Decarbonization of 20% of global ethylene capacity and expansion of polyethylene supply
- Projected construction to begin in 2024 and start-up in two phases
- Expected average annual CapEx of $1 billion on the project
- Anticipated delivery of $1 billion EBITDA annually and targeted returns on invested capital above 13% over the economic cycle
Financial Highlights
- Raised underlying earnings above pre-pandemic levels
- Substantial improvement in three-year cumulative free cash flow
- Reduction of net debt and pension liabilities by more than $10 billion
- Delivered around 84% of net income back to shareholders since spin
- Financial flexibility and operating discipline to navigate short-term market dynamics
Market Dynamics and Pricing
- Strong volume increases in packaging, especially plastics, across all regions
- Price headwind due to softer pricing in June, but expecting lower pricing in July
- Improvement in integrated margins in North America and expected improvement in Europe
- Dynamic feedstock costs and potential changes in ethane availability
- Strong exports to China and ability to supplement domestic supply
Global Economic Outlook and Volume Performance
- Global economic slowdown with decline in GDP expected in Q2, Q3, and Q4
- Volumes down 8% overall, with significant decline in Europe (-14%)
- Asia Pacific and Latin America volumes stronger, North America relatively flat
- Expectation of economic ramp back in 2024
- Polyethylene holding up well and cost advantage showing through results
No bad stock 