Dow Reports Second Quarter Results
Click:2671    DateTime:Jul.31,2017

 

Second Quarter 2017 Highlights
• Dow reported earnings per share of $1.07, or operating earnings per share of $1.08. This compares with earnings per share of $2.61 in the year-ago period, or operating earnings per share of $0.95. Certain Items in the quarter reflected an $0.08 per share charge for transactions and productivity actions and a $0.07 per share gain for a patent infringement award. Results in the year-ago period primarily reflected a $2.20 per share gain related to the Dow Corning ownership restructure and a $0.27 per share charge related to a restructuring program.
• Sales increased to $13.8 billion, up 16 percent year-over-year. Sales rose 8 percent excluding the addition of Dow Corning’s silicones business, with increases in all operating segments and all geographic areas. Sales gains were led by Performance Materials & Chemicals (up 13 percent) as well as Performance Plastics and Consumer Solutions (each up 8 percent), and by EMEAI (up 12 percent), Asia Pacific (up 8 percent) and North America (up 7 percent).
• Volume grew 3 percent excluding the impact of acquisitions, reflecting broad-based gains in all operating segments and all geographic areas, led by the Middle East and Africa (up 17 percent), India (up 14 percent), Asia Pacific (up 6 percent) and Europe (up 4 percent). Volume growth was led by businesses aligned to Dow’s downstream consumer-driven end-markets of automotive, infrastructure, consumer care, electronics and agriculture. Operating segment highlights include Consumer Solutions (up 9 percent), Agricultural Sciences (up 6 percent) and Infrastructure Solutions and Performance Materials & Chemicals (each up 3 percent).
• Price rose 5 percent, with gains in all geographic areas. Price increases were achieved in Performance Materials & Chemicals, Performance Plastics and Infrastructure Solutions.
• Operating EBITDA rose 12 percent to $2.8 billion, with gains in all operating segments, except Performance Plastics, driven by higher prices, broad-based demand growth, new product introductions, cost controls and productivity measures, and the contribution of Dow Corning’s silicones business. These gains more than offset higher feedstock costs, commissioning and startup costs at Sadara and in the U.S. Gulf Coast and planned maintenance spending.
• Dow generated $1.3 billion of cash flow from operations in the quarter, down $889 million from the year-ago period, driven by broad-based sales gains as well as increased investments in working capital related to Sadara product marketing activities. Dow continued to further enhance working capital efficiency,with an improvement of more than 8 days versus the year-ago period.
• Productivity and cost savings were $215 million in the quarter, an increase of $125 million versus the same quarter last year. In the quarter, Dow also completed its 2015 restructuring program.
• The Company achieved several milestones related to its strategic growth investments. On the U.S. Gulf Coast, Dow completed construction of its new ELITE™ enhanced polyethylene unit and continued to progress this unit and its new world-scale ethylene facility toward startup, which is imminent. In the Middle East, the Sadara joint venture continued its startup activities, and now has achieved commercial operations at 25 of the 26 production units, with the final unit preparing to start up this month.
• Dow recently entered into an agreement to sell a portion of Dow AgroSciences' corn seed business in Brazil for $1.1 billion in connection with conditional regulatory clearance of the proposed merger.
• Dow and DuPont advanced their proposed merger transaction. The companies reaffirmed the expectation to close the merger in August 2017, announced the Board of Directors for DowDuPont and achieved conditional regulatory clearance in key jurisdictions.

Comment
Andrew Liveris, Dow’s chairman and chief executive officer, stated:

“This quarter extended Dow’s track record of execution. We have now achieved nearly five years – 19 consecutive quarters – of year-over-year operating earnings growth and nearly 4 years – 15 consecutive quarters – of volume growth. This also marked our third consecutive quarter of delivering an all-time operating EBITDA record. And we continued our relentless focus on self-help productivity and cost-out. Our results speak to the power of our strategy and its key pillars of low-cost integration strength and world-class innovation capabilities, targeted to a focused set of core end-markets that value our materials science expertise. Our portfolio delivers, over and over again, under all economic conditions.

“Just as importantly, we ended the quarter on the cusp of delivering the most comprehensive slate of growth investments in our industry – across the U.S. Gulf Coast, at our Sadara joint venture and through the ongoing integration of our silicones platform. And we made significant advancements toward our historic merger with DuPont, which will enhance our leadership as the world’s premier materials science company.

“The value creation Dow continues to deliver through our industry-leading integration and world-class innovation is clear and powerful. Our business model – enabled by the strategy we put in place more than a decade ago and tested in increasingly volatile business conditions – has proven its ability to deliver long-term, sustainable shareholder value. Our shareholders have benefited from our strong dividend, share buybacks and TSR outperformance versus all of our relevant peers.”

Outlook
Commenting on the Company’s outlook, Liveris said:

“Global economic activity is increasing, with notable strength in manufacturing, investment and trade. Robust growth fundamentals continue to fuel expansion in the U.S., led by the strength of the consumer. Europe’s improvement is expected to remain on a steady path. Latin America is stabilizing with particular upside from its agriculture sector, and Brazil is showing early signs of recovery from a prolonged recession, though political uncertainty persists. China and India continue to establish themselves as consumption economies, underpinned by fiscal stimulus and infrastructure investments, which are driving domestic growth.

“Dow remains well-positioned to capture consumer-led demand and deliver superior solutions to customers around the world through our narrower and deeper end-market focus, industry-leading innovation and broad geographic reach. Our track record of disciplined execution and outperformance these last several years underscores the resilience, agility and value creation power of our business model.

“Looking forward, our team remains focused and disciplined, with a sharp execution mindset on the successful close of our merger with DuPont, rapid achievement of the synergies and realizing the value-creation of the intended companies, as well as a strong focus on delivering the materials science company, with a portfolio that will be unrivaled versus its peer group. Going into the merger close, Dow is coming from a position of incredible strength, with a proven track record of success. We have the right strategy, the right long-term growth drivers and the right portfolio. Dow has never been better positioned to continue delivering for our customers, employees, communities and shareholders.”