Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dow Inc (DOW, Financial) achieved its fourth consecutive quarter of year-over-year volume growth despite challenging macroeconomic conditions.
- Net sales increased to $10.9 billion, up 1% from the previous year, driven by higher demand and local prices in the United States and Canada.
- The company completed the acquisition of Circulus, adding 50,000 metric tons of recycled materials annually to its portfolio.
- Dow Inc (DOW) signed a long-term agreement with Linde for clean hydrogen supply, advancing its Path2Zero project.
- The company has a strong financial position with ample liquidity and no substantive debt maturities until 2027.
Negative Points
- The unplanned cracker outage in Texas negatively impacted operating EBIT, which was partly offset by higher integrated margins.
- Cash flow from continuing operations decreased year-over-year due to higher inventories and labor-related supply chain disruptions.
- The Industrial Intermediates and Infrastructure segment experienced a 2% volume decline, driven by lower volumes in Polyurethanes and Construction Chemicals.
- Performance Materials and Coatings segment saw a decline in local price year-over-year, with operating EBIT down $39 million due to higher raw material costs.
- Dow Inc (DOW) faces ongoing challenges in Europe due to soft demand and lack of consistent regulatory policy, prompting a strategic review of select European assets.
Q & A Highlights
Q: Can you provide an outlook for Packaging and Specialty Plastics pricing in the fourth quarter?
A: James Fitterling, CEO: We expect flat pricing for the quarter. We have announced price increases of $0.03 for October and November, but typically see prices soften towards the end of the year.
Q: How do you see the polyurethane market evolving, especially with the ongoing review of European assets?
A: James Fitterling, CEO: We anticipate a recovery in construction and durable markets, which drive polyurethane demand. The review of European assets is a portfolio shift and not a reflection of the business's viability. We aim to focus on our lowest-cost assets.
Q: What are the expectations for margins and EBITDA in Packaging and Specialty Plastics heading into 2025?
A: James Fitterling, CEO: We expect about 3% organic volume growth and benefits from higher operating rates. We anticipate an add-back of $300 million from unplanned events and $300 million from growth investments, leading to approximately $1 billion higher EBITDA.
Q: Regarding the Fort Saskatchewan project, how does its production cost compare to Freeport?
A: James Fitterling, CEO: We expect Fort Saskatchewan to have some of the best ethylene costs globally, similar to our lowest-cost asset in Texas. The project benefits from CO2 sequestration and selling ethylene with zero Scope 1 and 2 emissions.
Q: How does Dow plan to navigate potential global tariffs and duties, especially in polyethylene exports?
A: James Fitterling, CEO: We are a net exporter from the US Gulf Coast due to our competitive advantage. While tariffs exist, we focus on being a domestic player in key markets like Europe and China. We remain vigilant about regulatory changes, including carbon border adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
