M&A, Corporate and Financial News

Dow Second Quarter 2020 Results

Dow reports second quarter 2020 results. Financial Highlights.

GAAP loss per share was $0.31; Operating loss per share¹ was $0.26 and excludes significant items in the quarter, totaling $0.05 per share, primarily related to integration and separation costs.

Net sales were $8.4 billion, down 24% versus the year-ago period driven by both local price and volume declines, as the COVID-19 pandemic dramatically impacted results.

Local price declined 14% versus the year-ago period, primarily reflecting lower global energy prices. Currency decreased sales by 1%.

Volume declined 9% versus the year-ago period. Demand growth in food packaging, health and hygiene, home care and pharma applications was more than offset by weakness in durable good end-markets. Notably, the Company reported 3% year-over-year and 13% sequential volume improvements in Asia Pacific as the economy reopened in China.

Equity losses were $95 million versus equity losses of $15 million in the year-ago period, primarily driven by lower results at the Kuwait joint ventures on continued margin compression stemming from COVID-19.

GAAP Net loss from continuing operations was $217 million. Operating EBIT1 was $57 million, down from $1.1 billion in the year-ago period. Margin compression and increased equity losses were partially mitigated by the progress against our previously announced expense reduction actions.

Cash provided by operating activities – continuing ops. was $1.6 billion, including a release of $526 million of working capital as we managed production to demand. Dow delivered a $639 million increase in cash flow from ops. versus the year-ago period, driven by a strong working capital improvement as well as a $461 million ethylene capacity reservation payment from Olin. Capital expenditures were $273 million and free cash flow1 was $1.3 billion, up $836 million year-over-year. The Company’s ongoing prioritization of cash since spin has resulted in a cash flow conversion1 of 110% on a trailing 12 month basis.

Dividend returns to shareholders totaled $516 million in the quarter.

Total cash and available committed liquidity at quarter-end was approximately $12 billion, including $3.7 billion of cash and equivalents. The Company paid down nearly $600 million of debt in the quarter, which included full repayment of the previously accessed uncommitted lines, achieving a net debt improvement of more than $740 million year-to-date. Dow has no substantive long-term debt due until the second half of 2023.

Dow signed a definitive agreement to sell its rail infrastructure assets and related equipment at six major North American sites to Watco Companies on July 2, with expected cash proceeds at close in excess of $310 million by year end.


Jim Fitterling, Dow’s chairman and chief executive officer, commented on the quarter:

“Recognizing the significant impact that COVID-19 would have on demand in the quarter, Dow took proactive actions to electively focus on cash and maintain our financial strength with a continued emphasis on safe, reliable operations and disciplined capital allocation.

As a result, Dow once again generated higher cash flow in the quarter. We captured solid demand growth in packaging, health and hygiene, home care and pharma endmarkets, which partially offset weakness in consumer durable goods. Extended economic lockdowns shifted the inflection point for demand recovery in key markets and geographies into June, where we began to see gradual improvements across most industries.

The growing recovery in China and early signs of improvement in Western Europe are positive indicators for the United States and Latin America.

“Our proactive cost and cash interventions enabled us to continue to maximize our financial flexibility through the pandemic. We delivered another quarter of improved year-over-year cash flow from operations as we have every quarter since spin.

We maintained our liquidity position, further reduced our net debt, and we progressed our strategic priorities by announcing an agreement to divest certain rail infrastructure assets.

And importantly, we continued to stay close to our customers, providing new channels to access our solutions, such as our new MobilityScience™ platform for the transportation industry, and implementing enhanced supply chain visibility for them as we managed through this historic period.”


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