Dow's sales fell 22% in the first quarter and sales fell 11%

On April 25, Dow reported first-quarter 2023 financial results. For the first quarter, Dow reported net sales of $11.9 billion, down 22 percent from a year earlier, with declines across all operating segments, mainly due to the slowdown in global economic activity. Sales were flat sequentially as higher sales in the functional materials and coatings, packaging and specialty Plastics operating segments were offset by declines in the industrial intermediates and infrastructure operating segments.

Sales were down 11% year-over-year, driven by a 15% decline in the Europe, Middle East, Africa and India region (EMEAI). Sales volume increased 2% quarter-on-quarter, mainly due to higher sales in the functional materials and coatings, packaging and specialty Plastics operating segments.

Local prices fell 10 per cent year-on-year and 4 per cent month-on-month. The decline occurred in all operating segments and regions due to the ongoing global economic downturn and oversupply in the industry. Currency factors drove net sales down 1% year-over-year and up 2% sequentially.

On a generally accepted accounting principles (GAAP) basis, the net loss was $73 million. Operating earnings before interest and tax (EBIT) was $708 million, down $1.7 billion from a year ago, with declines across all operating segments due to local pricing cuts and lower utilization rates in response to changing market dynamics. A sequential increase of $107 million was driven by the functional materials and coatings segment.

Cash generated by Dow's operating activities, or continuing operations, was $531 million in the first quarter, down $1.1 billion from a year ago and $1.5 billion from the previous quarter. Over the past 12 months, the cash flow conversion rate has been 85%.

Jim Fitterling, Chairman and Chief Executive Officer of Dow, said, "In the face of a challenging macroeconomic environment, the Dow team has remained highly agile and disciplined, leveraging our structural strength in raw materials to focus on high-value products with more resilient demand, and keeping our operating rates in line with market dynamics. Our $1 billion 2023 savings drive is well underway. It strengthens our 'low cost service' operating model and continues to maximize cash flow generation. With sufficient liquidity and financial flexibility, the implementation of our strategy is progressing in an orderly manner. We are further implementing our disciplined and balanced capital allocation priorities to create long-term value."

"In addition, our annual benchmarks reflect the strength of our differentiated product portfolio and our disciplined and balanced capital allocation performance. Dow is focused on industry-leading cash flow generation, and since the company's spinoff, we have achieved a three-year average of best-in-class free cash flow yields and net debt reduction. Our three-year average EBITDA margin, return on capital investment and shareholder return are above the peer median, based on investments in higher returns, faster returns and lower risk projects."

Mr Fitterling said: "Looking ahead into the year, our consistent and disciplined execution of our strategy puts us in a stronger position to weather the impact of higher inflation on consumer demand and a weakening global economy. Our operational and cost interventions are expected to continue to pay dividends in 2023. We will remain flexible to respond quickly as conditions evolve and expect oil and gas price differentials to further strengthen our strategic cost advantage position. Importantly, the fundamentals for long-term growth in our vertical markets have not changed. We are advancing our twin strategies of 'decarbonisation and growth' and 'turning waste into treasure' to improve our underlying earnings position by $3bn over the economic cycle."