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The Dow Swings to a Net Loss as Sales Fall Across All of Its Operating Divisions

January 25, 2024
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Dow Inc., a chemicals company headquartered in Midland, Michigan, reported a net loss of $105 million, or 15 cents per share, for the fourth quarter. This marks a significant reversal from the year-earlier period when the company posted an income of $613 million, or 85 cents per share. Despite the loss, the adjusted per-share earnings for the quarter stood at 43 cents, surpassing the 40-cent consensus predicted by TradeAlgo.

Total sales for the quarter declined to $10.621 billion from $11.859 billion, but exceeded the FactSet consensus of $10.377 billion. The adjusted earnings figure excludes substantial items totaling 58 cents per share, including a noncash settlement charge related to pension de-risking plans.

Dow attributed the decline in sales across all operating segments to slower macro activity. Additionally, price and volume gains in packaging & specialty plastics were more than offset by seasonal demand declines in performance materials & coatings. The packaging & specialty plastics segment saw a 7% decrease in sales to $5.641 billion, down from $6.073 billion the previous year. The company noted a 3% year-over-year increase in volume, driven by higher packaging demand, primarily in the U.S. & Canada and Latin America. Sequentially, net sales increased by 3%, led by higher merchant sales of hydrocarbons and elevated polyethylene prices in all regions.

In the industrial intermediates & infrastructure segment, sales experienced a notable 19% decline to $2.9 billion, with a 17% decrease in local prices and a 2% reduction in volume due to constrained supply availability. Sales in the performance materials & coatings segment also fell by 8% to $1.9 billion, marked by a 12% reduction in local prices affecting both businesses.

Despite the challenging financial results, Dow's Chief Executive, Jim Fitterling, expressed a commitment to financial and operational discipline in the upcoming year. Fitterling acknowledged the expected softness in industrial and durable goods demand in the first quarter but expressed optimism regarding early positive signals in construction, automotive, and consumer electronics.

Rival company DuPont de Nemours Inc. recently issued a profit warning, anticipating weaker demand at the year-end to persist. DuPont's Chief Executive, Ed Breen, mentioned additional channel inventory destocking within industrial businesses and sustained weak demand in China as contributing factors to their projections.

Dow Inc.'s stock was down 0.6% in premarket trading and has experienced an 8% decline over the past 12 months, contrasting with the S&P 500, which has shown a 21% gain over the same period.

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Adan Harris
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