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Dow Inc. (DOW - Free Report) recorded a profit (on a reported basis) of $613 million or 85 cents per share in fourth-quarter 2022, down from a profit of $1,736 million or $2.32 per share a year ago.
Barring one-time items, adjusted earnings were 46 cents per share for the reported quarter, down from $2.15 a year ago. The figure missed the Zacks Consensus Estimate of 57 cents.
Dow recorded net sales of $11,859 million for the quarter, down roughly 17% year over year. It also missed the Zacks Consensus Estimate of $12,034.8 million. The company saw lower sales across its segments in the quarter due to customer destocking and slower global growth. The top line was hurt by lower local pricing, reduced volumes and unfavorable currency translation.
The company saw a 5% year-over-year decline in local prices in the reported quarter. Prices also fell 6% on a sequential comparison basis. Volumes were down 8% year over year on declines Europe, the Middle East, Africa, and India (“EMEAI”), and destocking in building & construction and consumer durables markets in the United States and Canada.
Packaging & Specialty Plastics: The division’s sales fell 16% year over year to $6.1 billion in the reported quarter. Volumes were down 4% year-over-year while local prices fell 9% as gains in functional polymers were more than offset by reduced polyethylene and olefin prices. Currency reduced sales by 3%.
Industrial Intermediates & Infrastructure: Sales for the unit tumbled 20% year over year to $3.7 billion. Local prices fell 1% in the quarter. Volumes declined 14% on lower demand in EMEAI in industrial, consumer durables, and building and construction applications. Currency reduced sales by 5%.
Performance Materials & Coatings: Revenues from the division declined 20% year over year to $2.1 billion. Volumes fell 13% while local price went down 2%. Volumes were impacted by declines in building and construction. Currency reduced sales by 5%.
FY22 Results
Earnings or full-year 2022 were $6.28 per share, down from $8.38 per share a year ago. Revenues were $56,902 million for the full year, up around 3.5% year over year.
Financials
Dow had cash and cash equivalents of $3,886 million at the end of 2022, up around 30% year over year. Long-term debt was $14,698 million, up around 3% year over year.
Cash provided by operating activities from continuing operations was $2.1 billion in the reported quarter while free cash flow was $1.5 billion.
Dow also returned $620 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Dow said that it is seeing initial positive signs from moderating inflation in the United States, improving energy outlook in Europe and the re-opening in China. It is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. As part of these actions, Dow plans to cut around 2,000 jobs globally. Dow expects these initiatives to deliver $1 billion in cost savings in 2023.
These actions are expected to further optimize its cost structure in the wake of near-term macroeconomic uncertainty while maintaining its long-term competitiveness across the economic cycle, the company noted. Dow expects to record a charge of $550-$725 million in the first quarter of 2023 for costs related to these actions.
Price Performance
Shares of Dow are down 3.8% over a year compared with the industry’s 3.8% rise.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Dow currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Commercial Metals Company (CMC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 0.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.2%, on average. STLD has rallied around 103% in a year.
Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 9.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 60% in a year.
Agnico Eagle currently carries a Zacks Rank #1. The Zacks Consensus Estimate for AEM’s current-year earnings has been revised 0.4% upward in the past 60 days.
Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average. AEM’s shares have gained 24% in the past year.
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Dow (DOW) Misses Q4 Earnings Estimates, Targets $1B Cost Savings
Dow Inc. (DOW - Free Report) recorded a profit (on a reported basis) of $613 million or 85 cents per share in fourth-quarter 2022, down from a profit of $1,736 million or $2.32 per share a year ago.
Barring one-time items, adjusted earnings were 46 cents per share for the reported quarter, down from $2.15 a year ago. The figure missed the Zacks Consensus Estimate of 57 cents.
Dow recorded net sales of $11,859 million for the quarter, down roughly 17% year over year. It also missed the Zacks Consensus Estimate of $12,034.8 million. The company saw lower sales across its segments in the quarter due to customer destocking and slower global growth. The top line was hurt by lower local pricing, reduced volumes and unfavorable currency translation.
The company saw a 5% year-over-year decline in local prices in the reported quarter. Prices also fell 6% on a sequential comparison basis. Volumes were down 8% year over year on declines Europe, the Middle East, Africa, and India (“EMEAI”), and destocking in building & construction and consumer durables markets in the United States and Canada.
Dow Inc. Price, Consensus and EPS Surprise
Dow Inc. price-consensus-eps-surprise-chart | Dow Inc. Quote
Segment Highlights
Packaging & Specialty Plastics: The division’s sales fell 16% year over year to $6.1 billion in the reported quarter. Volumes were down 4% year-over-year while local prices fell 9% as gains in functional polymers were more than offset by reduced polyethylene and olefin prices. Currency reduced sales by 3%.
Industrial Intermediates & Infrastructure: Sales for the unit tumbled 20% year over year to $3.7 billion. Local prices fell 1% in the quarter. Volumes declined 14% on lower demand in EMEAI in industrial, consumer durables, and building and construction applications. Currency reduced sales by 5%.
Performance Materials & Coatings: Revenues from the division declined 20% year over year to $2.1 billion. Volumes fell 13% while local price went down 2%. Volumes were impacted by declines in building and construction. Currency reduced sales by 5%.
FY22 Results
Earnings or full-year 2022 were $6.28 per share, down from $8.38 per share a year ago. Revenues were $56,902 million for the full year, up around 3.5% year over year.
Financials
Dow had cash and cash equivalents of $3,886 million at the end of 2022, up around 30% year over year. Long-term debt was $14,698 million, up around 3% year over year.
Cash provided by operating activities from continuing operations was $2.1 billion in the reported quarter while free cash flow was $1.5 billion.
Dow also returned $620 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Dow said that it is seeing initial positive signs from moderating inflation in the United States, improving energy outlook in Europe and the re-opening in China. It is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. As part of these actions, Dow plans to cut around 2,000 jobs globally. Dow expects these initiatives to deliver $1 billion in cost savings in 2023.
These actions are expected to further optimize its cost structure in the wake of near-term macroeconomic uncertainty while maintaining its long-term competitiveness across the economic cycle, the company noted. Dow expects to record a charge of $550-$725 million in the first quarter of 2023 for costs related to these actions.
Price Performance
Shares of Dow are down 3.8% over a year compared with the industry’s 3.8% rise.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Dow currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Commercial Metals Company (CMC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 0.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.2%, on average. STLD has rallied around 103% in a year.
Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 9.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 60% in a year.
Agnico Eagle currently carries a Zacks Rank #1. The Zacks Consensus Estimate for AEM’s current-year earnings has been revised 0.4% upward in the past 60 days.
Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average. AEM’s shares have gained 24% in the past year.