Chemicals Company Dow's Q2 Earnings Disappoint Amid Challenging Market Conditions; Stock Slips

Dow Inc (NYSE:DOW) shares are trading lower after the company reported second-quarter FY24 results.

Sales declined 4% Y/Y to $10.9 billion, missing the consensus of $11.01 billion.

Sales were up 1% sequentially, led by gains in Performance Materials & Coatings and Packaging & Specialty Plastics.

Adjusted EPS was $0.68, missing the consensus of $0.72.

Local price fell 4% Y/Y. Sequentially, local prices rose 1% Y/Y, aided by gains in Europe, the Middle East, Africa, and India (EMEAI).

Volume increased by 1% Y/Y, reflecting led by the U.S. & Canada.

Operating EBIT declined to $819 million from $885 million a year ago, while the margin contracted by 20 bps to 7.5%  for the quarter.

Segment: Packaging & Specialty Plastics sales decreased 7% Y/Y to $5.5 billion, and the operating EBIT margin of 12.7% was down by 280 bps.

Industrial Intermediates & Infrastructure sales fell 7% Y/Y to $2.95 billion, and the operating EBIT margin expanded by 130 bps Y/Y to 0.2%.

Performance Materials & Coatings sales rose 2% Y/Y to $2.24 billion, and the operating EBIT margin grew by 350 bps Y/Y to 6.5%.

DOW’s cash provided by operating activities from continuing operations for the quarter was $832 million, and free cash flow was $109 million.

DOW returned $691 million to the shareholders in the quarter, including $491 million in dividends and $200 million in share repurchases.

Jim Fitterling, chair and chief executive officer, said, “The pace of the global macroeconomic recovery has been slower than expected. We remain focused on working capital, reducing costs, and matching our operating rates to current demand.”

“As we look to the second half of the year, Team Dow is focused on continuing to deliver sequential earnings improvements while navigating through the slower macro environment we remain in.”

“While near-term demand in many markets that we serve is growing, building & construction and consumer durables are unlikely to significantly change in 2024. We will continue driving higher sales through our innovation portfolio and diverse product mix.”

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

Price Action: DOW shares are down 5.18% at $50.56 premarket at the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.