Dow's Polyethylene Products Post Strong Profits, Performance Beats Market Expectations

Dow reported earnings on July 23, with adjusted earnings per share of $1.44, compared with a loss of $0.42 per share in the same period last year. The results were well above the analyst consensus estimate of $1.28 compiled by S&P Capital IQ. Dow said that polyethylene products drove a 20% increase in overall local product selling prices, offsetting a 1% decline in product volumes. The company also said its cost-cutting and efficiency initiatives are progressing ahead of schedule.

Dow CEO Karen S. Carter said, “Overall market conditions were favorable this quarter, and the internal efficiency initiatives we implemented delivered better-than-expected results, further boosting profitability. We will continue to strengthen Dow’s operational resilience and ability to respond to market changes. This year, the incremental benefits generated through the ‘Transform to Win’ efficiency program are expected to reach $200 million, and the company’s total annual gains from internal cost reduction and efficiency improvements are projected to exceed $1.3 billion.”

The company’s net profit for the quarter reached $802 million, swinging to a profit from a loss of $801 million in the second quarter of 2025. Earnings before interest, taxes, depreciation and amortization (operating EBITDA) were $2.3 billion, compared with just $703 million in the same period last year. Total sales were $12.092 billion, up 20% from $10.104 billion a year earlier.

Looking ahead to the third quarter, Dow forecasts operating EBITDA of approximately $1.7 billion, higher than the $868 million reported in the same period last year.

The company's Chief Financial Officer, Jeff Tate, stated during the earnings conference call: "The sequential profit contraction is mainly due to the profit compression brought about by the latest polyethylene pricing in North America in June, which is also a typical cyclical trend in the industry following the seasonal demand peak in the second quarter."

Tait pointed out that the global packaging materials market demand remains strong, with a supply shortage of raw materials related to data centers. He stated, “Globally, the supply side of raw materials supports rising product prices, but production costs are also increasing; overall market demand is stable, but there are significant regional differences. In summary, we expect the growth rate of corporate operations to slow down in the third quarter, but overall profitability will remain robust.”

Speaking about the Americas market, Tate said, “The U.S. housing market remains weak, but consumer demand in the Americas is steady, overall economic activity is improving, and household consumption spending remains stable.” He added that geopolitical conflicts in the Middle East and ongoing logistics and transportation constraints continue to affect the supply of energy and chemical feedstocks, driving up market risk premiums. “The market is now placing increasing emphasis on supply chain security, which includes not only the stability and reliability of production supply, but also the resilience of logistics and transportation systems.”

The European market still faces structural challenges such as high operating and labor costs, but Tate said there have recently been positive factors, including government support policies and the implementation of trade protection measures. “Recently, the EU announced anti-dumping and anti-subsidy support policies, creating a more balanced market environment for local European chemical products. Polyol products had previously been hit by low-priced, predatory imports, and the relevant support policies will also improve their market position.”

Market signals in the Asia-Pacific region are mixed. Tate stated, "Retail data weakened in May, and consumer demand remains sluggish; however, recent industrial production and manufacturing utilization rates have shown a rebound." He also mentioned that China's refinery operations are gradually returning to normal, which will improve the overall energy supply situation in the Asia-Pacific region.

Performance of each business segment

1. Packaging and Specialty Plastics Segment

This segment covers the Packaging & Specialty Plastics business and the Hydrocarbons & Energy business. The segment posted operating earnings before interest and taxes of $1.3 billion, compared with just $71 million in the same period last year; segment sales were $6.4 billion, versus $5.0 billion a year earlier. Overall local product prices rose 30%, driven primarily by higher polyethylene prices; segment product volumes declined 4% year over year. Packaging & Specialty Plastics sales increased: higher polyethylene prices across global flexible packaging markets more than offset the revenue impact of lower polyethylene volumes in EMEA and Asia Pacific. Dow said the volume declines in these regions were affected by geopolitical conflict in the Middle East. Sales in the Hydrocarbons & Energy business also increased, as higher olefins prices offset the volume shortfall; the decline in volumes was due to planned maintenance at U.S. Gulf Coast facilities and a temporary outage at the steam cracker in Terneuzen, Belgium (the unit was restarted in June).

2. Industrial Intermediates and Infrastructure Sector

Segment sales were USD 3.2 billion, up 14% year over year; overall product prices increased by 15%, offsetting a 2% decline in volume. Volumes declined in polyurethanes and construction chemicals, partially offset by volume growth in the Industrial Solutions business. Segment operating EBIT was USD 246 million, compared with a loss of USD 185 million in the same period last year. The improvement in earnings was mainly attributable to expanded product margins, the implementation of internal cost-reduction initiatives, reduced workload from planned maintenance turnarounds, and the company’s suspension of recognizing equity losses from the Sadara joint venture.

3. High-Performance Materials and Coatings Segment

The segment's sales amounted to $2.4 billion, a year-on-year increase of 11%. Among them, the paint and functional monomer businesses drove a 4% rise in product prices; downstream silicone products contributed to an overall sales increase of 6%. The segment's EBITDA was $133 million, a decrease of $19 million compared to last year. The profit decline was primarily due to expenditures related to equipment maintenance and upgrades, as well as costs associated with the shutdown of the upstream siloxane production facility in Barry, UK.