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DOW Q2 Earnings and Revenues Miss Estimates on Lower Prices
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Dow Inc. (DOW - Free Report) logged profits (on a reported basis) of $439 million or 62 cents per share in second-quarter 2024, down from a profit of $485 million or 68 cents per share a year ago.
Barring one-time items, adjusted earnings were 68 cents per share for the reported quarter, down from 75 cents a year ago. The figure missed the Zacks Consensus Estimate of 72 cents.
Dow recorded net sales of $10,915 million for the quarter, down 4% year over year. It also missed the Zacks Consensus Estimate of $10,960.3 million. The top line was hurt by lower local pricing, which more than offset higher volumes.
Volumes were up 1% year over year driven by gains in the U.S. & Canada. This marked the third straight quarter of year-over-year volume growth. Local prices fell 4% year over year in the reported quarter. DOW faced headwinds from demand softness in Europe and Asia in the quarter.
Packaging & Specialty Plastics: The division’s sales fell 7% year over year to $5,515 million in the reported quarter. The figure was below our estimate of $5,592.8 million. Volumes were down 3% year over year as a decline in merchant hydrocarbon sales more than offset higher demand for functional polymers and polyethylene. Local prices fell 4% due to reduced downstream polymer prices. In the packaging and specialty plastics business, increased demand for industrial, consumer and flexible food packaging was more than offset by reduced prices, especially in infrastructure and mobility markets.
Industrial Intermediates & Infrastructure: Sales for the unit declined 7% year over year to $2,951 million. The figure was below our estimate of $3,065.8 million. Local prices fell 7% in the quarter. Volumes rose 1% on gains in polyurethanes and construction chemicals.
Performance Materials & Coatings: Revenues from the division rose 2% year over year to $2,243 million. The figure was above our estimate of $2,240.9 million. Volumes rose 7% while local prices went down 4%. Volumes increased on gains in all businesses and geographic regions.
Financials
Dow had cash and cash equivalents of $3,341 million at the end of the quarter, down around 10% from the prior quarter. Long-term debt was $16,016 million, down around 1% sequentially.
Cash provided by operating activities from continuing operations was $832 million in the reported quarter, down from $1,347 million in the year-ago quarter.
Dow also returned $691 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Moving ahead, Dow said that it is focused on delivering sequential earnings improvements while navigating through the slower global macroeconomic environment in the second half of 2024. While DOW is seeing growing demand in many markets that it serves, it does not expect a significant change in demand in building & construction and consumer durables in 2024. It will continue driving higher sales through its innovation portfolio and diverse product mix. DOW remains on track to deliver higher earnings and shareholder returns by leveraging its global scale, strategically advantaged cost positions and growth investments. DOW sees third-quarter net sales of around $11.1 billion.
Price Performance
DOW’s shares are down 0.7% in a year compared with the industry’s 11% decline.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
DOW currently carries a Zacks Rank #5 (Strong Sell).
Kronos is expected to report second-quarter results soon. The Zacks Consensus Estimate for KRO’s second-quarter earnings is pegged at 21 cents. The company’s shares have rallied roughly 23% in the past year.
Ashland is slated to report fiscal third-quarter results on Aug 6. The Zacks Consensus Estimate for ASH’s third-quarter earnings is pegged at $1.47. The company’s shares have gained roughly 4% in the past year.
Kinross is scheduled to report second-quarter results on Jul 31. The Zacks Consensus Estimate for Kinross' second-quarter earnings is pegged at 13 cents. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 77% in the past year.
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DOW Q2 Earnings and Revenues Miss Estimates on Lower Prices
Dow Inc. (DOW - Free Report) logged profits (on a reported basis) of $439 million or 62 cents per share in second-quarter 2024, down from a profit of $485 million or 68 cents per share a year ago.
Barring one-time items, adjusted earnings were 68 cents per share for the reported quarter, down from 75 cents a year ago. The figure missed the Zacks Consensus Estimate of 72 cents.
Dow recorded net sales of $10,915 million for the quarter, down 4% year over year. It also missed the Zacks Consensus Estimate of $10,960.3 million. The top line was hurt by lower local pricing, which more than offset higher volumes.
Volumes were up 1% year over year driven by gains in the U.S. & Canada. This marked the third straight quarter of year-over-year volume growth. Local prices fell 4% year over year in the reported quarter. DOW faced headwinds from demand softness in Europe and Asia in the quarter.
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 7% year over year to $5,515 million in the reported quarter. The figure was below our estimate of $5,592.8 million. Volumes were down 3% year over year as a decline in merchant hydrocarbon sales more than offset higher demand for functional polymers and polyethylene. Local prices fell 4% due to reduced downstream polymer prices. In the packaging and specialty plastics business, increased demand for industrial, consumer and flexible food packaging was more than offset by reduced prices, especially in infrastructure and mobility markets.
Industrial Intermediates & Infrastructure: Sales for the unit declined 7% year over year to $2,951 million. The figure was below our estimate of $3,065.8 million. Local prices fell 7% in the quarter. Volumes rose 1% on gains in polyurethanes and construction chemicals.
Performance Materials & Coatings: Revenues from the division rose 2% year over year to $2,243 million. The figure was above our estimate of $2,240.9 million. Volumes rose 7% while local prices went down 4%. Volumes increased on gains in all businesses and geographic regions.
Financials
Dow had cash and cash equivalents of $3,341 million at the end of the quarter, down around 10% from the prior quarter. Long-term debt was $16,016 million, down around 1% sequentially.
Cash provided by operating activities from continuing operations was $832 million in the reported quarter, down from $1,347 million in the year-ago quarter.
Dow also returned $691 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Moving ahead, Dow said that it is focused on delivering sequential earnings improvements while navigating through the slower global macroeconomic environment in the second half of 2024. While DOW is seeing growing demand in many markets that it serves, it does not expect a significant change in demand in building & construction and consumer durables in 2024. It will continue driving higher sales through its innovation portfolio and diverse product mix. DOW remains on track to deliver higher earnings and shareholder returns by leveraging its global scale, strategically advantaged cost positions and growth investments. DOW sees third-quarter net sales of around $11.1 billion.
Price Performance
DOW’s shares are down 0.7% in a year compared with the industry’s 11% decline.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
DOW currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Basic Materials space are Kronos Worldwide, Inc. (KRO - Free Report) , Ashland Inc. (ASH - Free Report) and Kinross Gold Corporation (KGC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kronos is expected to report second-quarter results soon. The Zacks Consensus Estimate for KRO’s second-quarter earnings is pegged at 21 cents. The company’s shares have rallied roughly 23% in the past year.
Ashland is slated to report fiscal third-quarter results on Aug 6. The Zacks Consensus Estimate for ASH’s third-quarter earnings is pegged at $1.47. The company’s shares have gained roughly 4% in the past year.
Kinross is scheduled to report second-quarter results on Jul 31. The Zacks Consensus Estimate for Kinross' second-quarter earnings is pegged at 13 cents. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 77% in the past year.