Dow Q2 Highlights: 27% Sales Decline, Challenging Macro Environment, Cost Savings & More

Dow Inc DOW reported a second-quarter FY23 sales decline of 27.1% year-over-year to $11.42 billion, beating the consensus of $11.27 billion.

Adjusted EPS was $0.75, above the consensus of $0.70.

Local prices declined 18% versus the year-ago period and 5% sequentially, reflecting declines in all operating segments and regions due to lower demand and global energy and feedstock costs.

Volume decreased 8% Y/Y, with a 14% decline in Europe, the Middle East, Africa, and India.

Operating EBIT declined by 62.7% Y/Y to $885 million, and the margin contracted by 750 bps to 7.7%.

DOW's cash provided by operating activities for the quarter was $1.35 billion, compared to $1.86 billion a year ago. Free cash flow was $786 million.

Packaging & Specialty Plastics sales decreased 27.9% Y/Y to $5.94 billion, and the operating EBIT margin of 15.5% was down by 190 bps.

Industrial Intermediates & Infrastructure sales fell 27.3% Y/Y to $3.18 billion, and the operating EBIT margin contracted by 1,080 bps to -1.1%.

Performance Materials & Coatings sales declined 26.8% Y/Y to $2.19 billion, and the operating EBIT margin fell by 1,570 bps to 3%.

The company’s return to shareholders totaled $743 million in the quarter, including $493 million in dividends and $250 million in share repurchases.

"Looking ahead, we will continue to execute our near-term cost savings actions and advance our longer-term strategic priorities as we manage through a macro environment that is expected to remain challenging in the second half of the year. The actions we outlined in January are on track to deliver $1 billion of cost savings this year and we continue to benefit from the solid financial position and focus on cash flow generation we have demonstrated since Spin,” commented chairman and CEO Jim Fitterling.

Price Action: DOW shares are trading higher by 2.45% at $53.84 on the last check Tuesday.