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DOW INC. (DOW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was weak with net sales $10.10B (-7% YoY, -3% QoQ), GAAP EPS -$1.18, and operating EPS -$0.42 as integrated margins compressed, equity earnings declined, and restructuring charges weighed on results .
  • Against S&P Global consensus, Dow missed on both revenue ($10.10B vs $10.23B*) and operating EPS (-$0.42 vs -$0.16*); EBITDA (company operating) was $703MM vs $791MM* consensus, a miss as well .
  • Management announced aggressive actions: a 50% dividend cut to $0.35 per share starting in Q3, $400MM 2025 cost savings (raised from $300MM), European upstream asset shutdowns, and near‑term cash levers totaling >$6B by 2026 .
  • Q3 2025 outlook calls for EBITDA ≈$800MM, with sequential uplift in Packaging & Specialty Plastics (PE margin recovery and Poly7 ramp) and Industrial Intermediates & Infrastructure, partly offset by seasonal and silane margin headwinds in Performance Materials & Coatings .

What Went Well and What Went Wrong

  • What Went Well

    • Downstream silicones strength and seasonal coatings demand lifted Performance Materials & Coatings: Op. EBIT rose to $152MM (+$6MM YoY, +$103MM QoQ) on lower input costs and volume gains .
    • Strategic and cash actions advanced: $2.4B proceeds from Diamond Infrastructure Solutions, divestitures (~$250MM at ~10x EBITDA), and NOVA judgment cash expected; “we anticipate … more than $6 billion by 2026” .
    • Clear Q3 roadmap: “we anticipate our third quarter EBITDA to be approximately $800 million,” with +$95MM sequential P&SP EBITDA on July price increases and Poly7 ramp .

  • What Went Wrong

    • PE chain pressure: April’s -$0.03/lb polyethylene price settlement and lower operating rates drove P&SP Op. EBIT down to $71MM (vs $703MM YoY; -$271MM QoQ); equity earnings fell (Sadara, Thai JVs) .
    • Macro/tariffs and oversupply: Volume -1% YoY; local price -7% YoY across segments; equity losses increased in II&I; cash from operations fell to -$470MM on margin compression .
    • Significant items totaled $0.76 per share (severance, asset charges, litigation/indemnities, tax valuation allowances), swinging GAAP loss and reducing operating EPS .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net Sales ($USD Billions)$10.92 $10.41 $10.43 $10.10
GAAP EPS ($)$0.62 -$0.08 -$0.44 -$1.18
Operating EPS ($)$0.68 $0.00 $0.02 -$0.42
Operating EBITDA ($USD Millions)$1,501 $1,205 $944 $703
Operating EBIT ($USD Millions)$819 $454 $230 -$21
Cash from Operations – Continuing Ops ($USD Millions)$832 $811 $104 -$470

Segment revenue and EBIT

SegmentQ2 2024 Net Sales ($MM)Q1 2025 Net Sales ($MM)Q2 2025 Net Sales ($MM)Q2 2024 Op. EBIT ($MM)Q1 2025 Op. EBIT ($MM)Q2 2025 Op. EBIT ($MM)
Packaging & Specialty Plastics$5,515 $5,310 $5,025 $703 $342 $71
Industrial Intermediates & Infrastructure$2,951 $2,855 $2,786 $7 -$128 -$185
Performance Materials & Coatings$2,243 $2,071 $2,129 $146 $49 $152

KPIs

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Equity in Earnings (Losses) of Affiliates ($MM)$26 N/A-$20 -$30
Free Cash Flow ($MM, non‑GAAP)$109 $44 -$581 -$1,132
Dividends Paid ($MM)$984 (six months ended) $492 (quarter) $494 (quarter) $496 (quarter)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total EBITDA ($MM)Q3 2025N/A≈ $800 New outlook
P&SP EBITDA seq. delta ($MM)Q3 2025N/A≈ +$95 New outlook
II&I EBITDA seq. delta ($MM)Q3 2025N/A≈ +$85 New outlook
PM&C EBITDA seq. delta ($MM)Q3 2025N/A≈ -$65 New outlook
Cost Savings ($MM in 2025)FY 2025~$300 ~ $400 Raised
Enterprise CapEx ($B)FY 2025$3.5 $2.5 Lowered
Dividend per share ($)Q3 2025Prior payout reduced by 50%$0.35 payable Sep 12, 2025 Lowered
European asset actions2026–2029Under review Shut down 3 upstream assets; Op. EBITDA uplift ~$200MM at full run-rate by 2029; benefits begin 2026 Actions defined

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
PE pricing & marginsQ4: price declines, margin squeeze; pushing price hikes in early 2025 April -$0.03/lb weighed on Q2; June recovery; expect July increases 5–7¢ and Poly7 ramp to lift Q3 Stabilizing with expected Q3 improvement
Downstream siliconesQ4/Q1: downstream growth despite upstream oversupply in China Seventh consecutive quarter of downstream silicones growth; PM&C Op. EBIT up Positive, continuing
Tariffs/macro/geopoliticsQ4: 2-speed economy; tariff risks “lower-for-longer” backdrop; trade uncertainties disrupted exports; anti-competitive imports cited Persistent headwind
Cost actions & CapExQ4: $1B cost target by 2026; CapEx recalibration 2025 savings raised to ~$400MM; total CapEx $2.5B; Path2Zero delayed More aggressive
Portfolio optimizationQ4: European asset review initiated Shutdowns announced (Böhlen cracker, Schkopau CAV, Barry siloxanes) Executing
Cash leversQ4: Diamond Infra stake sale planned $2.4B received; Macquarie optionality to 49%; NOVA proceeds expected ~$1.2B Accretive near term
AI/data centers & infrastructureQ4: early positioning; utility/co-location assets Diamond Infra enabling projects; behind-the-meter power and environmental ops opportunities Emerging opportunity

Management Commentary

  • “This quarter the Dow team advanced several aggressive actions … we anticipate will total more than $6 billion by 2026 … we are also adjusting our dividend … to maintain a balanced capital allocation framework” — Jim Fitterling, Chair & CEO .
  • “We anticipate our third quarter EBITDA to be approximately $800 million … driven by higher integrated margins … and our cost reduction program … increased to approximately $400 million this year” — Jeff Tate, CFO .
  • “Poly7 … fully sold out … we expect integrated EBITDA margins to improve in the third quarter” — Karen S. Carter, COO .
  • “Signs of oversupply … exporting … at anti-competitive economics require broader industry engagement and additional regulatory action” — Jim Fitterling .

Q&A Highlights

  • Dividend philosophy and flexibility: Fixed dividend remains core to Dow’s investor base; reduced by 50% to regain capital flexibility during a prolonged downcycle .
  • PE operating rates and margin trajectory: April export disruption lowered rates; Q3 expected uplift on price increases, Poly7 volumes, and improved ethylene balance .
  • Anti-competitive imports and regulatory actions: Pressure evident in polyurethanes and emerging in PE; actions/engagement ongoing in Latin America and Europe .
  • Cash, CapEx, and cost savings: 2025 CapEx at ~$2.5B; sequential cost tailwinds delivered; optional Macquarie stake raise to 49% could bring total proceeds to ~$3B .
  • JV/Equity earnings outlook (Sadara, Kuwait/Thailand): Monitoring and refinancing preparations; lower equity earnings expected near term due to events and market conditions .

Estimates Context

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD)$11,016,823,420*$10,533,015,300*$10,260,658,810*$10,226,308,730*
Revenue Actual ($USD)$10,915,000,000 $10,405,000,000 $10,431,000,000 $10,104,000,000
EPS Consensus Mean ($)$0.716*$0.235*-$0.013*-$0.164*
Operating EPS Actual ($)$0.68 $0.00 $0.02 -$0.42
  • Q2 2025: revenue miss (actual $10.10B vs $10.23B*) and EPS miss (operating EPS -$0.42 vs -$0.16*). Q1 2025 was a beat on both EPS and revenue vs consensus*.

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect Q3 sequential improvement (EBITDA ≈$800MM) led by PE margin recovery, Poly7 volume, and II&I project ramp; watch July/August realized price implementation in PE and maintenance headwinds .
  • Dividend reset is a pivotal narrative change, freeing cash to navigate the trough and potentially enabling opportunistic buybacks or growth as conditions improve; payable $0.35 in September .
  • Structural actions in Europe are significant (three upstream asset shutdowns) and should underpin medium-term margin resilience and ~$200MM EBITDA uplift at full run-rate by 2029 .
  • Macro/tariff risks remain the principal overhang; anti-competitive import dynamics could prolong margin pressure in certain chains (polyurethanes, silanes, emerging in PE), making regulatory outcomes a catalyst .
  • Estimate revisions: FY 2025 EPS and EBITDA forecasts likely require downward adjustment after Q2 misses and continued lower-for-longer narrative, partially offset by raised cost-savings and Q3 sequential uplift* .
  • Cash positioning is strong: Diamond Infrastructure proceeds ($2.4B received, optional to $3B) and expected NOVA cash ($1.2B) provide flexibility; minimal maturities until 2027 .
  • Medium term thesis: Leveraging low-cost Americas footprint, integration, and downstream silicones growth plus Path2Zero (timing dependent) should enhance normalized earnings power as cycle recovers .