Dow Rebounded as Pricing Restored Operating Profit
Operating EBIT climbed to $1.65 billion as higher prices lifted margins.
Dow Inc. (DOW), the materials-science company, returned to profitability in the second quarter as a price-led sales recovery reversed the contraction recorded at the start of the year.
Net sales rose 20% from a year earlier to $12.09 billion, accelerating from a 6% decline in the first quarter and increasing 23% sequentially. Local prices increased 20%, while volume fell 1%, a narrower decline than the prior quarter's 2% drop.
Dow posted net income of $802 million, compared with a $445 million first-quarter loss and an $801 million loss a year earlier. Operating earnings were $1.44 a share, swinging from losses of $0.14 a share sequentially and $0.42 a share a year earlier. The operating EBIT margin expanded to about 13.6% from about 1.6% in the first quarter.
Packaging & Specialty Plastics drove the improvement. Segment sales rose 27% to $6.39 billion as a 30% increase in local prices outweighed a 4% volume decline. Operating EBIT climbed to $1.28 billion from $71 million a year earlier as higher polyethylene prices expanded integrated margins despite planned maintenance and lower volumes.
Industrial Intermediates & Infrastructure also returned to an operating profit, earning $246 million compared with a $185 million loss a year earlier. A 15% increase in local prices helped lift sales 14%, while weaker polyurethane and construction-chemical volumes were partly offset by growth in Industrial Solutions tied to alkoxylation investments and data-center demand.
Performance Materials & Coatings recorded Dow's strongest segment volume growth, with volume up 6% and sales rising 11% to $2.36 billion. Operating EBIT nevertheless declined $19 million to $133 million as fixed costs, turnaround work and expenses from the shutdown of the Barry, U.K., upstream siloxanes plant outweighed self-help benefits.
Dow now expects more than $1.3 billion of 2026 self-help benefits after raising its Transform to Outperform target by about $200 million. The program produced $526 million of pretax significant-item costs during the quarter and reduced GAAP earnings by $0.45 a share.
Operating cash flow increased to $1.32 billion and swung from a $470 million use of cash a year earlier as higher earnings absorbed a working-capital build tied to revenue growth. Dow restarted its EMEAI cracker in June, though planned U.S. Gulf Coast maintenance continued to constrain Hydrocarbons & Energy volumes and merchant sales.