Dow Reports Q3 Results Above Consensus, Expects Positive Impact From Rising Oil Prices

Dow Inc DOW reported a third-quarter FY23 sales decline of 24% year-over-year to $10.73 billion, beating the consensus of $10.32 billion.

The decrease in sales was attributed to declines in all operating segments, which resulted from slower global macroeconomic activity.

Adjusted EPS was $0.48, above the consensus of $0.44.

Local price decreased 18% year-over-year, with declines in all operating segments and regions, primarily due to lower feedstock and energy costs. Sequentially, local price was down 7%.

Volume decreased 6% Y/Y, due to declines in the merchant Hydrocarbons & Energy sales.

Operating EBIT declined by 47.6% Y/Y to $626 million, and the margin contracted by 270 bps to 5.8% for the quarter.

DOW's cash provided by operating activities for the quarter was $1.66 billion, compared to $1.94 billion a year ago. Free cash flow was $1.06 billion.

The company delivered cash flow conversion of 103% on a trailing 12-month basis.

DOW returned total $617 million to the shareholders in the quarter, including $492 million in dividends and $125 million in share repurchases.

Packaging & Specialty Plastics sales decreased 26% Y/Y to $5.45 billion, and the operating EBIT margin of 8.7% was down by 200 bps.

Industrial Intermediates & Infrastructure sales fell 25% Y/Y to $3.04 billion, and the operating EBIT margin contracted by 340 bps to 0.7%.

Performance Materials & Coatings sales declined 20% Y/Y to $2.13 billion, and the operating EBIT margin fell by 300 bps to 8.4%.

Management Change: The company announced that its Board named Jeffrey L. Tate as chief financial officer, effective November 1, 2023. Tate will succeed Howard Ungerleider, who has elected to retire.

"With our continued focus on operational and financial discipline, we are navigating challenging market dynamics and expect to further benefit from rising oil prices that favor our cost-advantaged asset footprint. We remain committed to our disciplined and balanced capital allocation priorities as we advance our strategy. By 2030, our Decarbonize and Grow and Transform the Waste strategies are expected to deliver more than $3 billion in underlying earnings, reduce greenhouse gas emissions by 5 million metric tons and commercialize 3 million metric tons of circular and renewable solutions annually," commented chairman and CEO Jim Fitterling.

Price Action: DOW shares are trading higher by 1.06% at $48.75 premarket on Tuesday.