Dow Reports Q4 Results, Says Strong Balance Sheet Ready To Invest And Capitalize On Economic Upswing

Dow Inc DOW reported fourth-quarter fiscal 2023 sales decline of 10.4% year-over-year to $10.62 billion, beating the consensus of $10.37 billion.

Sales were down 1% sequentially, as price and volume gains in Packaging & Specialty Plastics were more than offset by seasonal demand declines in Performance Materials & Coatings.

Adjusted EPS was $0.43, above the consensus of $0.40.

Local price decreased 13% year-over-year, with declines in all operating segments due to lower feedstock and energy costs. Sequentially, the local price was flat.

Volume increased 2% Y/Y, reflecting gains across all regions except Asia Pacific, which was flat. Operating EBIT declined by 7% Y/Y to $559 million, and the margin expanded by 20 bps to 5.3% for the quarter.

DOW’s cash provided by operating activities for the quarter was $1.63 billion, compared to $2.09 billion a year ago. Free cash flow was $870 million. The company delivered cash flow conversion of 95.8% on a trailing 12-month basis.

DOW returned $616 million to the shareholders in the quarter, including $491 million in dividends and $125 million in share repurchases.

Packaging & Specialty Plastics sales decreased 7% Y/Y to $5.64 billion, and the operating EBIT margin of 11.8% was up by 100 bps.

Industrial Intermediates & Infrastructure sales fell 19% Y/Y to $2.95 billion, and the operating EBIT margin contracted by 400 bps to 0.5%.

Performance Materials & Coatings sales declined 8% Y/Y to $1.9 billion, and the operating EBIT margin recovered by 310 bps to (3.2)%.

“In 2024, we will maintain our commitment to financial and operational discipline as we continue to navigate dynamic market conditions. While we expect softness in industrial and durable goods demand to continue in the first quarter, we are encouraged by early positive signals in areas including construction, automotive, and consumer electronics,” commented Jim Fitterling, chair, and chief executive officer of DOW.

“Our strong balance sheet and cash generation give us the flexibility to cover all of our capital allocation priorities as we progress through the economic cycle and advance our Decarbonize & Grow and Transform the Waste strategies. These projects are expected to deliver more than $3 billion in underlying earnings annually by 2030,” Fitterling added.

Price Action: DOW shares traded higher by 2.5% at $54.42 on the last check Thursday.