Dow Q3 Earnings: Volume Growth Amid Market Softness, Q4 Outlook Remains Cautious

Dow Inc DOW shares are trading higher after the company reported third-quarter results.

Sales rose 1% year over year to $10.88 billion, beating the consensus of $10.65 billion, on higher sales in the U.S. and Canada. Adjusted EPS was $0.47, beating the consensus of $0.46.

Local prices remained flat as improvements in Packaging & Specialty Plastics were offset by decreases in Performance Materials & Coatings segments. Sequentially, local prices fell 1%.

Volume increased by 1%, aided by Performance Materials & Coatings segment. Operating EBIT rose to $641 million from $626 million a year ago, while the margin expanded by 10 bps to 5.9% for the quarter.

Segment: Packaging & Specialty Plastics sales were up 1% to $5.52 billion, and the operating EBIT margin of 11.2% was up by 250 bps.

Industrial Intermediates & Infrastructure sales fell 2% to $2.96 billion, and the operating EBIT margin was (1.8)% versus 0.7% in the year-ago quarter.

Performance Materials & Coatings sales rose 4% to $2.21 billion, and the operating EBIT margin contracted by 210 bps to 6.3%.

DOW’s operating cash flow from continuing operations for the quarter was $800 million, and free cash flow was $64 million.

DOW returned $584 million to the shareholders in the quarter, including $490 million in dividends and $94 million in share repurchases.

Jim Fitterling, chair and chief executive officer, said, “In the third quarter, Team Dow delivered our fourth consecutive quarter of year-over-year volume growth, while managing ongoing macroeconomic softness and an unplanned cracker outage in Texas.”

“Our cost-advantaged footprint in the Americas continues to provide a strong competitive edge, enabling Dow to capture demand growth in attractive markets. However, a meaningful recovery has yet to materialize in Europe and China. In addition, Europe’s regulatory environment has led to increasing challenges across many sectors and value chains.”

Outlook: Dow expects fourth-quarter revenue of ~$10.70 billion vs. consensus of $10.786 billion.

“Our financial strength will continue to support our counter-cyclical growth investments, which are focused in higher-value businesses and regions, particularly where demand is resilient and we have a competitive cost advantage. Altogether, these investments are expected to deliver more than $3 billion in underlying earnings by 2030,” added Fitterling.

Investors can gain exposure to the stock via Invesco Dow Jones Industrial Average Dividend ETF DJD and  FT Vest DJIA Dogs 10 Target Income ETF DOGG.

Price Action: DOW shares are up 2% at $52.52 premarket at the last check Thursday.

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