The Third Quarter Results of Dow, Wacker, Sanyou and Other Companies are Released!

The chemical industry is currently facing unfavorable situations such as slowing economic growth, declining demand and oversupply. Compared with last year, the profit margin of upstream raw materials has begun to weaken, leading to profit losses for some chemical companies this year. The recent third-quarter financial reports released by chemical giants Wanhua Chemical, Dow, and Covestro show that profits generally declined in the first three quarters.

Dow's operating profit dropped more than 60% to US$302 million

Dow released its financial report for the third quarter of 2023, which showed that Q3 net sales were US$10.73 billion, a year-on-year decrease of 23.98%; operating profit was US$302 million, a significant decrease of more than 60% year-on-year. According to GAAP, earnings per share were $0.42; based on operating income, earnings per share were $0.48, a decrease from $1.11 in the same period last year and $0.75 in the previous quarter.

Industrial intermediates and basic chemicals business fell 25%. In the third quarter, net sales of the industrial intermediates and basic chemicals business were US$3 billion, a decrease of 25% from the same period last year. Regional prices fell 17% year over year, and currency exchange rates contributed -1% to net sales. Sales volume fell 7% year-over-year, with both businesses reporting declines, primarily due to slowing global demand. Quarter-over-quarter net sales decreased 4% as volume increases in Europe, the Middle East, Africa and India (EMEAI) and Asia Pacific were offset by regional price decreases in all regions.

In the third quarter, net sales of the Performance Materials and Coatings business were US$2.1 billion, a 20% decrease from the same period last year. Regional prices fell 17% year-on-year, with both businesses experiencing declines. Volumes were down 3% year over year and net sales were down 3% sequentially as volume growth in both businesses and all regions was offset by lower regional prices. The Performance Materials and Coatings business reported a decrease in net sales from the prior year period primarily due to lower regional prices.

Dow expects net sales in the fourth quarter of 2023 to range from US$10 billion to US$10.5 billion, with the midpoint lower than market expectations of US$10.48 billion. Based on sales in the first three quarters, Dow's sales in 2023 may be in the range of US$45 billion, will be lower than in 2022. Covestro expects EBITDA for the full year of 2023 to be between 1.1 billion and 1.6 billion euros. Against the backdrop of an expected economic downturn in the second half of the year, Covestro expects these key performance indicators to be at the lower end of the expected range. The performance of chemical giants may still be under pressure.

Wacker Chemical's third-quarter sales fell 29% year-on-year

Wacker Chemical Co., Ltd.'s sales and profits in the third quarter of 2023 declined significantly due to the continued severe market environment. Sales for the current period were 1.52 billion euros (3rd quarter 2022: 2.13 billion euros), a year-on-year decrease of 29%. Lower sales prices were the main reason for the volume decline, and currency effects also having a minor negative impact. Compared with the second quarter of 2023 (€1.75 billion), sales were 13% lower.

WACKER achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of 152 million euros in the third quarter of 2023 (third quarter of 2022: 457 million euros), a year-on-year decrease of 67%. Lower product prices, lower sales volume, and lower utilization of some production equipment are the main reasons for the decline in EBITDA in this period, which dropped 41% from the previous quarter (256 million euros). WACKER Group's EBITDA profit margin from July to September 2023 was 10.0%, compared with 21.4% in the same period last year and 14.6% in the previous quarter.

The group's profit before interest and tax (EBIT) for the current period was 49 million euros, a decrease of 86% from the same period last year (351 million euros), and the EBIT profit margin was 3.2% (third quarter of 2022: 16.4%). Net profit for the current period was 34 million euros (third quarter of 2022: 259 million euros), and earnings per share were 0.56 euros (third quarter of 2022: 5.08 euros).

Sanyou Chemical’s third quarter net profit decreased by 63.41% 

According to news on October 27, Sanyou Chemical released its third quarter report. The announcement shows that the company's operating income in the first three quarters was 16,414,664,008.61 yuan, a year-on-year decrease of 9.38%, and the net profit attributable to shareholders of the listed company was 347,760,830.46 yuan, a year-on-year decrease of 63.41%.

Wanhua Chemical's net profit in the first three quarters was 12.7 billion yuan, a decrease of 6.65%

 Wanhua Chemical's third quarter report shows that in the first three quarters of 2023, it achieved operating income of 132.554 billion yuan, a year-on-year increase of 1.64%; net profit was 12.703 billion yuan, a year-on-year decrease of 6.65%; basic earnings per share was 4.05 yuan. Affected by the year-on-year decline in global crude oil, natural gas and other basic energy prices, the energy costs of major chemical raw materials and European companies have declined year-on-year. However, downstream demand is in the recovery stage and product prices have declined year-on-year.

Covestro's third quarter net profit loss was 31 million euros

Covestro released key group data for the third quarter of 2023 on October 27, saying that affected by lower sales prices and a slight decline in sales volume, Covestro's third-quarter sales fell 22.7% year-on-year to 3.6 billion euros (same period last year: 4.6 billion euros). Earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 8.3% to 277 million euros (same period last year: 302 million euros), mainly due to currency fluctuations and lower sales due to lower demand. In contrast, margins improved, with a positive impact on EBITDA, as raw material and energy prices fell from the very high levels seen in the prior year period, offsetting lower sales price levels. The Group attaches great importance to efficiency, and the resulting reduction in selling and administrative expenses and fixed cost of goods also had a positive impact on EBITDA. Net profit in the third quarter was negative 31 million euros (same period last year: 12 million euros), and free operating cash flow (FOCF) increased from 33 million euros in the same period last year to 308 million euros.

In the third quarter, both the sales price level and volume of the two major business segments "Functional Materials" and "Solutions and Specialty Chemicals" declined, especially in Europe, the Middle East, Africa and Latin America except Mexico. Still, the company's strong focus on efficiency in implementing its "Sustainable Future" strategy has had an impact. Fixed costs fell further by tens of millions of euros in the third quarter compared with the same period last year. Covestro expects fixed costs to be reduced by hundreds of millions of euros this year compared with last year.