Dow reports sales, profit decline

MIDLAND—Dow Chemical Co. reported first quarter net income of $258 million or 32 cents a share, down from net income of $601 million or 74 cents a share in the first quarter of 2019.

Revenue was $9.77 billion, down from $10.97 billion a year earlier.

Last year’s net income figure includes $445 million or 58 cents a year in discontinued operations, related to the company’s merger with DuPont and then the split of the combined companies into three entities. Net income from continuing operations was $256 million, up from $156 million a year earlier.

The company also released a figure of “operating earnings per share” of 59 cents, which excludes 27 cents a share in restructuring and asset related charges, early extinguishment of debt, and integration and separation costs.

“I am proud of the Dow team’s determination and resilience in the midst of the global pandemic and rapid decline in global energy prices,” Dow Chairman and CEO Jim Fitterling said. “We ensured the safety and security of our people and operations, maintained business continuity, and rapidly established an effective crisis management response. We showcased the necessity and value of our products as we met strong demand from our customers in food packaging, health and hygiene, and cleaning end-markets. And, we leveraged our extensive geographic reach and asset flexibility to quickly respond to shifting trends in regional consumption, as well as in feedstock prices, as crude oil prices declined 60 percent through the quarter. Our volumes and operating rates reflected divergent demand patterns, as we met increasing needs for consumer staple non-durable goods, which countered lower requirements for discretionary durable goods. We also experienced margin compression in our upstream polyurethanes and silicones chains on weaker industry fundamentals. We partly offset the headwinds with stranded cost removal, effectively managing our working capital, and demonstrating our operational responsiveness and agility.”

Revenue in the packaging and specialty plastics segment was $4.61 billion, down from $5.14 billion a year earlier, with earnings of $5 million, down from $38 million a year earlier, driven by lower earnings in joint ventures in Thailand and Kuwait.

Revenue in the industrial intermediates and infrastructure segment was $3.05 billion, down from $3.49 billion a year earlier. The segment posted a loss of $76 million, vs. a loss of $48 million a year earlier, due to “margin compression” at a joint venture in Kuwait.

Revenue in the performance materials and coatings segment was $2.07 billion, down from $2.32 billion a year earlier. The segment posted equity earnings of $1 million, vs. break-even a year earlier.

“While we are beginning to see indications of a recovery from COVID-19 in China, the full extent of the impact of the pandemic in other major geographies is still being determined as the virus continues to spread,” Fitterling said. “Assuming a gradual and sustainable return of global economic activity and reopening of economies in May and June, we expect a recovery will begin to take hold as the year progresses. We are taking immediate and additional proactive measures to further strengthen our financial position. These actions include: further reducing our capital expenditure target to $1.25 billion, representing a $750 million reduction versus 2019; trimming operating expenses by $350 million; and unlocking another $500 million from working capital. In addition, we are temporarily idling select manufacturing units to balance production to demand across markets more severely affected by restrained economic activity. Operationally, we will continue to take advantage of our global footprint and industry-leading asset capabilities, remain close to our customers, and ensure availability of products essential to consumers and instrumental to containing the global pandemic, such as hand sanitizer and materials for personal protective equipment.”

To listen to a conference call discussing these results, visit investors.dow.com.

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