Dow Inc. (NYSE:DOW) stock rose Thursday after the chemicals giant reported better-than-expected third-quarter earnings and revenue, driven by higher polyethylene prices, stronger margins and cost-cutting measures.
Dow reported adjusted earnings of 71 cents per share, beating analysts’ consensus estimate of 64 cents.
Revenue rose 13% year over year to $11.267 billion, narrowly exceeding the consensus estimate of $11.266 billion.
Dow Earnings Beat As Higher Prices Lift Revenue
Local prices increased 14% year over year, driven by stronger pricing in Packaging & Specialty Plastics and higher polyethylene prices across all regions. Currency fluctuations had no year-over-year impact.
Despite stronger pricing, Dow’s overall sales volume declined 1% year over year, reflecting softer demand in Asia Pacific and disruptions linked to the Middle East conflict.
Operating EBITDA exceeded $1.5 billion as higher selling prices and cost reductions helped offset increased raw material and logistics expenses.
Demand remained mixed. Stronger consumer electronics and home care markets supported growth in Performance Materials & Coatings.
During Thursday’s earnings call, CEO Karen Carter warned that high interest rates and weakening consumer confidence continue to weigh on demand for housing-related products across regions, with building and construction remaining the company’s weakest end market.
Dow generated $1.839 billion in operating cash flow during the quarter, up $709 million from a year earlier, while free cash flow reached $1.1 billion.
Dow ended the quarter with approximately $14 billion in liquidity and no significant debt maturities until 2029.
The company repurchased about $300 million in debt during the quarter and plans another $200 million in repurchases in the fourth quarter.
Combined with its March 2027 Eurobond maturity, these actions are expected to reduce debt by approximately $1.4 billion.
See More:
Top Momentum Stocks
Dow’s Plastics Business Leads Growth
Packaging & Specialty Plastics revenue climbed 18% to $5.8 billion. Operating EBIT increased by more than $385 million to approximately $585 million, supported by higher polyethylene prices, stronger margins and cost savings.
Industrial Intermediates & Infrastructure revenue rose 8% to $3.1 billion, with local prices increasing 16%. Operating EBIT improved by $223 million to $176 million.
Performance Materials & Coatings revenue increased 8% to $2.3 billion, while operating EBIT reached $154 million.
Higher prices, stronger downstream silicones volumes and savings from the closure of the U.K. Siloxanes unit supported results.
Dow Cuts Jobs, Targets $2 Billion in Improvements
Dow completed its $1 billion cost-savings program for 2025 and continued restructuring its European operations under its Transform to Outperform strategy.
The company generated more than $150 million in additional sequential cost-saving benefits during the third quarter.
Transformation initiatives delivered approximately $450 million in improvements year to date, including about $250 million during the quarter.
Working-capital improvements freed up more than $400 million in cash during the quarter. Dow remains on track to release more than $500 million in the second half of 2026.
The company expects approximately $700 million in growth and productivity improvements this year and about $2 billion in cumulative improvements by the end of 2027.
Dow has completed roughly 70% of its planned 4,500-role workforce reduction and expects to largely finish this phase by year-end.
Productivity initiatives are projected to generate approximately $150 million in benefits during the second half of 2026.
Dow Sees Stable Fourth-Quarter Earnings, Bets on AI Infrastructure
Dow expects fourth-quarter operating EBITDA of approximately $1.5 billion, supported by about $100 million in additional cost savings and more than $100 million in lower turnaround expenses.
The company anticipates global polyethylene integrated margins will improve by approximately 2 cents per pound from third-quarter levels.
Management expects broadly flat sequential earnings as higher polyethylene prices, lower turnaround spending and cost savings offset seasonal weakness.
However, elevated European energy costs and logistics disruptions remain concerns.
Dow is also expanding its presence in higher-growth markets, including artificial intelligence infrastructure, electronics, mobility and energy applications.
Its closed-loop liquid cooling systems and advanced thermal fluids serve markets growing at double-digit rates. Several additional investments in silicones are expected to generate paybacks within two to three years.
The company is shifting production toward lower-cost facilities while exiting more expensive operations.
Key initiatives include restarting its lowest-cost, most flexible European cracker and closing the energy-intensive Barry Siloxanes unit in the U.K.
DOW Price Action: Dow shares were up 1.48% at $30.83 at the time of publication on Thursday, according to Benzinga Pro data.
Photo via Shutterstock
Recent Comments