Dow reports third quarter 2019 results



  • GAAP EPS from continuing operations of $0.45; Operating EPS¹ of $0.91 versus pro forma results of $1.34 in the year-ago period. Operating EPS excludes significant items in the quarter, totaling $0.46 per share, primarily related to: environmental charges; integration and separation costs; and a gain associated with litigation matters.
  • GAAP Net Income of $347 million; Operating EBIT¹ of $1.1 billion versus pro forma results of $1.6 billion in the year-ago period.
  • Net Sales were $10.8 billion, down 15% versus pro forma results in the year-ago period, driven by lower local prices primarily due to declines in global energy prices.
  • Volume declined 2% versus pro forma results in the year-ago period. Demand growth in packaging, polyurethanes and silicones applications was more than offset by lower hydrocarbon co-product sales, resulting from a lighter feedstock slate in Europe, and increased ethylene integration from the startup of new U.S. Gulf Coast assets. Excluding the Hydrocarbons & Energy business, volume rose 1%.
  • Local price declined 12% versus pro forma results in the year-ago period, driven primarily by decreases in polyethylene, hydrocarbon co-products, siloxanes and isocyanates. Currency decreased sales by 1%.
  • Equity losses were $44 million, compared to pro forma equity earnings of $135 million in the year-ago period. The reduction was primarily due to lower results at the Kuwait joint ventures, driven by margin compression in monoethylene glycol (MEG) and polyethylene.
  • Operating EBIT was $1.1 billion, down from pro forma results of $1.6 billion in the year-ago period, reflecting margin compression and the impact from lost production in Argentina. These factors were partly offset by savings from cost synergies and stranded cost removal, as well as new capacity on the U.S. Gulf Coast. Sequentially, Operating EBIT rose $58 million and Operating EBIT Margin expanded 80 basis points (bps), driven by lower planned maintenance spending in the Industrial Solutions business and margin expansion in Packaging & Specialty Plastics.
  • Completed the Materials Science Division $1.365 billion cost synergy program and removed $40 million of stranded costs in the quarter.
  • Cash provided by operating activities – continuing operations was $1.8 billion, up $1.6 billion versus the year-ago period. Capital expenditures in the quarter were $472 million and free cash flow2 was $1.3 billion.
  • Returned $0.6 billion to shareholders in the quarter, including $0.5 billion in dividends and $0.1 billion in share repurchases.



Three Months Ended September 30

Three Months Ended June 30

In millions, except per share amounts


As Reported


Pro Forma

vs. SQLY

[B / (W)]


As Reported

vs. PQ

[B / (W)]

Net Sales






Operating EBIT¹






Operating EBIT Margin¹



(230) bps


80 bps

Operating EBITDA¹






Operating EPS¹






Cash provided by operating activities – continuing ops






  1. Op. EPS, Op. EBIT, Op. EBIT Margin and Op. EBITDA are non-GAAP measures. See page 13 for further discussion.
  2. Free cash flow is defined as cash flows from operating activities – continuing operations, excluding the impact of ASU 2016-15, less capital expenditures.
  3. Financial information for the three months ended September 30, 2018 was prepared on a pro forma basis and determined in accordance with

    Article 11 of Regulation S-X.


Jim Fitterling, chief executive officer, commented on the quarter:

Our results this quarter demonstrated the Dow team’s focus on managing operational levers in response to a difficult business environment. We grew volume in our packaging, polyurethanes and silicones businesses, and once again successfully leveraged our industry-leading feedstock flexibility in the U.S. and Europe. Our team also took actions to improve pricing – with notable improvements in the Packaging and Specialty Plastics business toward the end of the quarter. Further, we continued to drive down our cost structure, completing the $1.365 billion cost synergy program and removing $40 million of stranded costs. Together, these factors delivered sequential earnings, margins and free cash flow improvements. Overall, our results showcased the strengths of the Dow portfolio and team.”


Packaging & Specialty Plastics


Three Months Ended September 30

Three Months Ended June 30

In millions, except margin percentages



vs. SQLY

[B / (W)]


vs. PQ

[B / (W)]

Net Sales






Operating EBIT






Operating EBIT Margin



190 bps


100 bps

Equity Earnings (Losses)






Packaging & Specialty Plastics net sales were $5.1 billion, down $1.1 billion versus pro forma results in the year-ago period. Volume declined 4% as growth in Packaging and Specialty Plastics was more than offset by a decline in Hydrocarbons & Energy. Local price declined 13%, and currency decreased net sales by 1%.

Packaging and Specialty Plastics reported a decline in net sales as volume growth was more than offset by reduced prices. Volume gains were reported in Asia Pacific and Europe, Middle East, Africa & India. Lower volume in Latin America was due to restricted monomer supply as ethylene operations in Argentina were offline through the quarter. The business reported the strongest end-market growth in industrial and consumer packaging, flexible food and specialty packaging, and health and hygiene applications.

Hydrocarbons & Energy reported a net sales decline on lower volume and price. The sales volume decline was driven primarily by: lighter feedstock usage in Europe, leading to lower co-product production volumes; increased ethylene integration (lower merchant sales) from the startup of new U.S. Gulf Coast assets; and planned turnaround activity in Europe.

Equity earnings for the segment were $23 million, down from pro forma equity earnings of $83 million in the year-ago period. The decline was primarily driven by lower earnings from the Kuwait joint ventures and increased equity losses from Sadara.

Operating EBIT was $798 million, down $59 million versus pro forma results in the year-ago period. Margin expansion, contributions from new capacity and cost synergy savings were more than offset by lower equity earnings.

In September, a judgment was entered by The Court of the Queen’s Bench in Alberta, Canada ordering Nova Chemicals to pay the Company approximately CAD$1.43 billion (equivalent to approximately USD$1.08 billion). The judgment relates to an initial ruling in June 2018 where the court found that Nova violated several contractual agreements related to ethane allocation and ethylene production under a jointly-owned ethylene asset. The judgment is subject to appeal. On October 10, 2019, Dow received the related cash payment (net of tax withholding) of USD$0.8 billion. Subsequently, the Company issued a make whole call for the full redemption of $1.25 billion of notes due in 2021, further reducing debt.

Industrial Intermediates & Infrastructure


Three Months Ended September 30

Three Months Ended June 30

In millions, except margin percentages



vs. SQLY

[B / (W)]


vs. PQ

[B / (W)]

Net Sales






Operating EBIT






Operating EBIT Margin



(620) bps


110 bps

Equity Earnings (Losses)






Industrial Intermediates & Infrastructure net sales were $3.4 billion, down $548 million versus pro forma results in the year-ago period. Volume was flat, local price declined 13%, and currency decreased net sales by 1%.

Polyurethanes & Construction Chemicals reported a net sales decline, as modest volume growth was more than offset by price declines, led by lower components (isocyanates and polyols) prices. Local price declines were reported in all geographic regions. Volume growth was led by the U.S. & Canada on improved supply of methylene diphenyl diisocyanate (MDI), as the year-ago period was impacted by planned turnaround activity. In addition, volume growth continued in polyurethane systems, as the business marked 25 consecutive quarters of year-over-year volume growth.

Industrial Solutions reported lower net sales, primarily driven by price declines that reflected lower feedstock costs. The business reported a modest decline in volume, driven by reduced demand in energy, agricultural and automotive end-markets, which more than offset growth in catalyst applications and pharma end-markets.

Equity losses for the segment were $70 million, down from pro forma equity earnings of $54 million in the year-ago period, primarily due to margin compression in isocyanates at Sadara and MEG at the Kuwait joint ventures.

Operating EBIT was $193 million, down $273 million versus pro forma results in the year-ago period, primarily due to lower equity earnings and margin compression in isocyanates and MEG.

Performance Materials & Coatings


Three Months Ended September 30

Three Months Ended June 30

In millions, except margin percentages



vs. SQLY

[B / (W)]


vs. PQ

[B / (W)]

Net Sales






Operating EBIT






Operating EBIT Margin



(670) bps


(20) bps

Equity Earnings (Losses)






Performance Materials & Coatings net sales were $2.3 billion, down $302 million versus pro forma results in the year-ago period. Local price declined 10%, volume declined by 1%, and currency decreased net sales by 1%.

Consumer Solutions reported a decline in net sales as volume growth in Asia Pacific and the U.S. & Canada was more than offset by local price declines in all geographic regions, led by lower siloxanes prices. The business reported year-over-year volume growth in the infrastructure end-market, as well as improved demand for siloxanes in Asia Pacific. These more than offset demand contraction in automotive and consumer electronics end-markets.

Coatings & Performance Monomers reported lower net sales on declines in local price and volume. Coatings volume declined, primarily driven by lower demand in U.S. & Canada architectural coatings and in Asia Pacific industrial coatings end-markets. Performance Monomers volume declined, primarily due to lower merchant sales of acrylates in North America.

Operating EBIT was $200 million, down $198 million versus pro forma results in the year-ago period, primarily due to margin compression in siloxanes and lower coatings and monomers demand.


Over the past year, we have made strong progress on our operational and financial playbook for the new Dow,” said Fitterling. “We have taken prudent actions to adapt quickly to the macro environment and to preserve our financial strength. Moving forward, we will continue to leverage our feedstock flexibility; advance lower-risk, higher-return growth investments; and achieve our stranded cost removal target. We will also remain steadfast in driving improvements to our free cash flow – demonstrated by our recent debt redemption announcement, which will use the cash payment from the Nova judgment. These actions enable us to manage the current environment and place us in a strong competitive position when the industrial economy rebounds.”

Conference Call

Dow will host a live webcast of its third quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 8:00 a.m. ET. The webcast and slide presentation that accompany the conference call will be posted on the events and presentations page of

About Dow

Dow (NYSE: DOW) combines one of the broadest technology sets in the industry with asset integration, focused innovation and global scale to achieve profitable growth and become the most innovative, customer centric, inclusive and sustainable materials science company. Dow’s portfolio of performance materials, industrial intermediates and plastics businesses delivers a broad range of differentiated science-based products and solutions for our customers in high-growth segments, such as packaging, infrastructure and consumer care. Dow operates 113 manufacturing sites in 31 countries and employs approximately 37,000 people. Dow delivered pro forma sales of approximately $50 billion in 2018. References to Dow or the Company mean Dow Inc. and its subsidiaries. For more information, please visit or follow @DowNewsroom on Twitter.

Cautionary Statement about Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance, financial condition, and other matters, and often contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.

Forward-looking statements include, but are not limited to, expectations as to future sales of Dow’s products; the ability to protect Dow’s intellectual property in the United States and abroad; estimates regarding Dow’s capital requirements and need for and availability of financing; estimates of Dow’s expenses, future revenues and profitability; estimates of the size of the markets for Dow’s products and services and Dow’s ability to compete in such markets; expectations related to the rate and degree of market acceptance of Dow’s products; the outcome of certain Dow contingencies, such as litigation and environmental matters; estimates of the success of competing technologies that may become available and expectations regarding the benefits and costs associated with each of the foregoing.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements are based on certain assumptions and expectations of future events which may not be realized and speak only as of the date the statements were made. In addition, forward-looking statements also involve risks, uncertainties and other factors that are beyond Dow’s control that could cause Dow’s actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, but are not limited to: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war; weather events and natural disasters; ability to protect, defend and enforce Dow’s intellectual property rights; increased competition; changes in relationships with Dow’s significant customers and suppliers; unanticipated expenses such as litigation or legal settlement expenses; unanticipated business disruptions; Dow’s ability to predict, identify and interpret changes in consumer preferences and demand; Dow’s ability to complete proposed divestitures or acquisitions; Dow’s ability to realize the expected benefits of acquisitions if they are completed; the availability of financing to Dow in the future and the terms and conditions of such financing; and disruptions in Dow’s information technology networks and systems. Additionally, there may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business.

Risks related to achieving the anticipated benefits of our separation from DowDuPont Inc. include, but are not limited to, a number of conditions including risks outside the control of Dow including risks related to (i) Dow’s inability to achieve some or all of the benefits that it expects to receive from the separation from DowDuPont, (ii) certain tax risks associated with the separation, (iii) Dow’s inability to make necessary changes to operate as a stand-alone company, (iv) the failure of Dow’s pro forma financial information to be a reliable indicator of Dow’s future results, (v) Dow’s inability to enjoy the same benefits of diversity, leverage and market reputation that it enjoyed as a combined company, (vi) Dow’s inability to receive third-party consents required under the separation agreement, (vii) Dow’s customers, suppliers and others’ perception of Dow’s financial stability on a stand-alone basis, (viii) non-compete restrictions under the separation agreement, (ix) receipt of less favorable terms in the commercial agreements we entered into with E. I. du Pont de Nemours and Company n/k/a/ DuPont de Nemours, Inc.(“DuPont”) and Corteva, Inc. (“Corteva”), including restrictions under intellectual property cross-license agreements, than Dow would have received from an unaffiliated third party; and (x) Dow’s obligation to indemnify DuPont and/or Corteva for certain liabilities.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. For a more detailed discussion of Dow’s risks and uncertainties, see the section titled “Risk Factors” contained in Dow Inc. and TDCC’s combined Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019, in the Current Report on Form 8-K of Dow Inc. and TDCC, filed with the SEC on July 25, 2019, recasting portions of the TDCC 10-K for the fiscal year ended December 31, 2018, and in Part I, Item 1A of the Annual Report on Form 10-K of TDCC for the fiscal year ended December 31, 2018. Dow Inc. and TDCC assume no obligation to update or revise publicly any forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable laws.

Separation from DowDuPont

On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or “DuPont”) completed the separation of its materials science business and Dow Inc. became the direct parent company of The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the “Company”), owning all of the outstanding common shares of TDCC. For filings related to the period commencing April 1, 2019 and thereafter, TDCC was deemed the predecessor to Dow Inc., and the historical results of TDCC are deemed the historical results of Dow Inc. for periods prior to and including March 31, 2019. The information in this report reflects the results of Dow and its consolidated subsidiaries, after giving effect to the distribution to DowDuPont of TDCC’s agricultural sciences business (“AgCo”) and specialty products business (“SpecCo”) and the receipt of E. I. du Pont de Nemours and Company and its consolidated subsidiaries’ (“Historical DuPont”) ethylene and ethylene copolymers business (other than its ethylene acrylic elastomers business) (“ECP”).

The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and Historical DuPont each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

Unaudited Pro Forma Financial Information

In order to provide the most meaningful comparison of results of operations and results by segment, supplemental unaudited pro forma financial information has been included in the following financial schedules. The unaudited pro forma financial information is based on the consolidated financial statements of TDCC, adjusted to give effect to the separation from DowDuPont as if it had been consummated on January 1, 2017. For the nine months ended September 30, 2019 and the three and nine months ended September 30, 2018, pro forma adjustments have been made for (1) the margin impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont, (2) the removal of the amortization of ECP’s inventory step-up recognized in connection with the Merger, and (3) the elimination of the impact of events directly attributable to the Merger, internal reorganization and business realignment, separation, distribution and other related transactions (e.g., one-time transaction costs). The results for the three months ended September 30, 2019, are presented under accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The unaudited pro forma financial information has been presented for informational purposes only and is not necessarily indicative of what Dow’s results of operations actually would have been had the separation from DowDuPont been completed as of January 1, 2017, nor is it indicative of the future operating results of Dow. The unaudited pro forma information does not reflect restructuring or integration activities or other costs following the separation from DowDuPont that may be incurred to achieve cost or growth synergies of Dow. For further information on the unaudited pro forma financial information, please refer to the Company’s Current Report on Form 8-K dated June 3, 2019.

Non-GAAP Financial Measures

This earnings release includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures include the Company’s pro forma consolidated results and pro forma earnings per share on an adjusted basis. Management uses these measures internally for planning, forecasting and evaluating the performance of the Company’s segments, including allocating resources. Dow’s management believes that these non-GAAP measures best reflect the ongoing performance of the Company during the periods presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the Company and a more useful comparison of year-over-year results.


For further information, please contact:

Neal Sheorey

[email protected]
+1 989-636-6347

Kyle Bandlow

[email protected]
+1 989-638-2417

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