MIDLAND—Revenue and profit both declined substantially at Dow Inc., the Midland-based chemical giant, for the second quarter ended June 30, as the coronavirus pandemic slowed down business worldwide.
Revenue for the quarter was $8.35 billion, down 24 percent from $11 billion in the year-earlier period, and the company posted a quarterly loss of $225 million or 31 cents a share, vs. net income of $75 million or 10 cents a share a year earlier.
For the first half of the year, revenue was $18.12 billion, down from $21.98 billion a year earlier. Net income was $14 million or 1 cent a share, down from $631 million or 84 cents a share a year earlier.
The company also posted an “operating earnings before interest and taxes” figure of $57 million, down from $1.1 billion in the year-ago period.
“Recognizing the significant impact that COVID-19 would have on demand in the quarter, Dow took proactive actions to electively focus on cash and maintain our financial strength with a continued emphasis on safe, reliable operations and disciplined capital allocation,” said CEO Jim Fitterling. “As a result, Dow once again generated higher cash flow in the quarter. We captured solid demand growth in packaging, health and hygiene, home care and pharma end-markets, which partially offset weakness in consumer durable goods. Extended economic lockdowns shifted the inflection point for demand recovery in key markets and geographies into June, where we began to see gradual improvements across most industries. The growing recovery in China and early signs of improvement in Western Europe are positive indicators for the United States and Latin America.”
Dow’s Packaging and Specialty Plastics segment posted sales of $4 billion, down from $5.2 billion a year earlier, and equity earnings of $20 million, down from $74 million a year earlier. The decline was driven by reduced polyethylene pricing and volume declines in the United States and Canada. Growth in packaging and health and hygiene applications was offset by declines in automotive, infrastructure and construction.
The Industrial Intermediates & Infrastructure segment posted sales of $2.42 billion, down from $3.34 billion in the same quarter a year earlier. The segment posted an equity loss of $113 million this year vs. $78 million last year. There was reduced demand for construction chemicals, and in the furniture and bedding and automotive segments.
The Performance Materials and Coatings segment posted sales of $1.86 billion, down from $2.36 billion a year earlier, and equity earnings of $2 million, up from $1 million a year earlier. Growth in home care products and do-it-yourself coatings was more than offset by a decline in siloxanes.
“Based on what we’ve seen in the second quarter and into July, we continue to expect a gradual and uneven recovery and, therefore, remain intensely focused on the actions within our control and maximizing our operational advantages,” said Fitterling. “Our disciplined approach to cash generation and capital allocation, in addition to our structural cost improvements, will continue to serve as a solid foundation for us to weather this downturn and position us to capture significant value as markets lift. For that reason, we will upsize our 2020 operating expense reduction target from $350 million to $500 million through additional structural cost interventions. We will also initiate a restructuring program during the quarter, targeting more than $300 million in annualized EBITDA benefit by the end of 2021. This program includes a 6 percent reduction in Dow’s global workforce as well as actions to exit uncompetitive assets. While these are difficult decisions, they are necessary to maintain competitiveness while the economic recovery gains traction.”
To listen to a replay of a conference call discussing these results, visit investors.dow.com.