MIDLAND—The reorganized chemical giant Dow Inc. reported net income of $75 million or 10 cents a share in the second quarter ended June 30, down from $1.33 billion or $1.78 a share a year earlier, and integration and separation costs were higher than a year earlier.
Revenue was $11.01 billion, down from $12.79 billion a year earlier.
For the six months, net income was $631 million or 84 cents a share, down from $2.74 billion or $3.66 a share a year earlier. Revenue was $21.99 billion, down from $25.03 billion a year earlier.
The company said the sales decline was in line with the company’s expectations, driven mostly by local price declines in polyethylene, siloxanes and isocyanates and lower sales of hydrocarbon co-products. “Margin compression” in those markets was also a factor in lower profitability.
“In spite of challenging market conditions, our results reflect the benefits of Dow’s streamlined and more focused portfolio, continued cost synergy savings and stranded cost removal,” Dow CEO Jim Fitterling said in a press release. “In the quarter, we faced margin compression in our intermediate products in both our core business and equity earnings. However, we achieved demand growth in packaging applications, supported by new capacity on the U.S. Gulf Coast. We delivered more than $175 million of savings from cost synergies and stranded cost removal. We also moved quickly to further tighten our expense and capital spending in response to the macro environment. We delivered higher cash flow from operations. And on a sequential basis, after adjusting for higher planned maintenance spending, the Dow team achieved core earnings growth. This result underscores our discipline and focus on agile operational and financial management.”
Sales in performance materials and coatings were $2.36 billion, down 12 percent from $2.67 billion in the second quarter of 2018. Operating earnings before interest and taxes was $214 million, down from $292 million.
Sales in industrial intermediates and infrastructure were $3.34 billion, down 16 percent from $3.97 billion a year earlier. Operating EBIT was $154 million, down from $502 million a year earlier.
Sales in packaging and specialty plastics were $5.21 billion, down from $6.13 billion a year earlier. Operating EBIT was $768 million, down from $926 million a year earlier.
Said Fitterling: “Looking ahead, we still see global growth, but the pace of that expansion has slowed, as buying patterns remain cautious due to ongoing trade and geopolitical uncertainties. In this environment, we will maintain cost and operating discipline by continuing cost synergy and stranded cost removal actions, by reducing our planned capital expenditures for the year from $2.5 billion to $2 billion, without sacrificing high-return growth projects, and by continuing with disciplined margin management. These near-term steps are responsive to the current market environment. Over the longer-term, our purpose-built portfolio and leading business positions, combined with a leaner cost structure and a suite of incremental, high-return growth investments, will continue to differentiate Dow and drive our earnings growth trajectory.”
To listen to a replay of a conference call discussing these results, visit investors.dow.com.