Dow Reports Second Quarter Results

  • Earnings Per Share of $1.07; Operating Earnings Per Share of $1.08, up 14%
  • Sales Increase to $13.8B; Ex. M&A Sales Rise 8% with Gains in all Segments and Geographies
  • Volume Grows 11%, or 3% Ex. M&A, with Broad-Based Growth in all Segments and Geographies
  • Price Increases 5% with Gains in all Geographies
  • EBITDA of $2.8B; Operating EBITDA Increases 12%, or $295 Million

Second Quarter 2017 Highlights

  • Dow reported earnings per share of $1.07, or operating earnings per share of $1.08.(1) This compares with earnings per share of $2.61 in the year-ago period, or operating earnings per share of $0.95. Certain Items in the quarter reflected an $0.08 per share charge for transactions and productivity actions and a $0.07 per share gain for a patent infringement award. Results in the year-ago period primarily reflected a $2.20 per share gain related to the Dow Corning ownership restructure and a $0.27 per share charge related to a restructuring program.
  • Sales increased to $13.8 billion, up 16 percent year-over-year. Sales rose 8 percent excluding the addition of Dow Corning’s silicones business, with increases in all operating segments and all geographic areas. Sales gains were led by Performance Materials & Chemicals (up 13 percent) as well as Performance Plastics and Consumer Solutions (each up 8 percent), and by EMEAI (up 12 percent), Asia Pacific (up 8 percent) and North America (up 7 percent).
  • Volume grew 3 percent excluding the impact of acquisitions, reflecting broad-based gains in all operating segments and all geographic areas, led by the Middle East and Africa (up 17 percent), India (up 14 percent), Asia Pacific (up 6 percent) and Europe (up 4 percent). Volume growth was led by businesses aligned to Dow’s downstream consumer-driven end-markets of automotive, infrastructure, consumer care, electronics and agriculture. Operating segment highlights include Consumer Solutions (up 9 percent), Agricultural Sciences (up 6 percent) and Infrastructure Solutions and Performance Materials & Chemicals (each up 3 percent).
  • Price rose 5 percent, with gains in all geographic areas. Price increases were achieved in Performance Materials & Chemicals, Performance Plastics and Infrastructure Solutions.
  • Operating EBITDA(2) rose 12 percent to $2.8 billion, with gains in all operating segments, except Performance Plastics, driven by higher prices, broad-based demand growth, new product introductions, cost controls and productivity measures, and the contribution of Dow Corning’s silicones business. These gains more than offset higher feedstock costs, commissioning and startup costs at Sadara and in the U.S. Gulf Coast and planned maintenance spending.
  • Dow generated $1.3 billion of cash flow from operations(3) in the quarter, down $889 million from the year-ago period, driven by broad-based sales gains as well as increased investments in working capital related to Sadara product marketing activities. Dow continued to further enhance working capital efficiency,(4) with an improvement of more than 8 days versus the year-ago period.
  • Productivity and cost savings were $215 million in the quarter, an increase of $125 million versus the same quarter last year. In the quarter, Dow also completed its 2015 restructuring program.
  • The Company achieved several milestones related to its strategic growth investments. On the U.S. Gulf Coast, Dow completed construction of its new ELITE™ enhanced polyethylene unit and continued to progress this unit and its new world-scale ethylene facility toward startup, which is imminent. In the Middle East, the Sadara joint venture continued its startup activities, and now has achieved commercial operations at 25 of the 26 production units, with the final unit preparing to start up this month.
  • Dow recently entered into an agreement to sell a portion of Dow AgroSciences' corn seed business in Brazil for $1.1 billion in connection with conditional regulatory clearance of the proposed merger.
  • Dow and DuPont advanced their proposed merger transaction. The companies reaffirmed the expectation to close the merger in August 2017, announced the Board of Directors for DowDuPont and achieved conditional regulatory clearance in key jurisdictions.


Andrew Liveris, Dow’s chairman and chief executive officer, stated:

“This quarter extended Dow’s track record of execution. We have now achieved nearly five years – 19 consecutive quarters – of year-over-year operating earnings growth and nearly 4 years – 15 consecutive quarters – of volume growth. This also marked our third consecutive quarter of delivering an all-time operating EBITDA record. And we continued our relentless focus on self-help productivity and cost-out. Our results speak to the power of our strategy and its key pillars of low-cost integration strength and world-class innovation capabilities, targeted to a focused set of core end-markets that value our materials science expertise. Our portfolio delivers, over and over again, under all economic conditions.

“Just as importantly, we ended the quarter on the cusp of delivering the most comprehensive slate of growth investments in our industry – across the U.S. Gulf Coast, at our Sadara joint venture and through the ongoing integration of our silicones platform. And we made significant advancements toward our historic merger with DuPont, which will enhance our leadership as the world’s premier materials science company.

“The value creation Dow continues to deliver through our industry-leading integration and world-class innovation is clear and powerful. Our business model – enabled by the strategy we put in place more than a decade ago and tested in increasingly volatile business conditions – has proven its ability to deliver long-term, sustainable shareholder value. Our shareholders have benefited from our strong dividend, share buybacks and TSR outperformance versus all of our relevant peers.”


Three Months Ended

In millions, except per share amounts

June 30,


June 30,


Net Sales



Adjusted Sales(5)






Net Income Available for Common Stockholders



Net Income Available for Common Stockholders,

Excluding Certain Items






Earnings per Common Share – Diluted



Operating Earnings per Share



Agricultural Sciences

Agricultural Sciences reported second quarter sales of $1.6 billion, up 3 percent year-over-year, driven by a double-digit increase in the Seeds business. Volume increased 6 percent, with gains in both Seeds and Crop Protection businesses, while price declined 3 percent.

Seeds volume rose double-digits, primarily due to increased demand for POWERCORE® corn seeds in Latin America as well as higher demand for cotton seeds in North America, including the highly successful launch of ENLIST™ cotton. In the quarter, the business also received the necessary import approvals to allow for the full commercial launch of ENLIST™ corn seeds in the U.S. and Canada for the 2018 growing season.

Crop Protection volume increased on higher demand for herbicides and insecticides, which more than offset lower demand for fungicides. The business also benefited from the ENLIST™ cotton seeds launch through the increased, accompanying sales of ENLIST DUO® herbicide. The business reported robust growth for its new crop protection chemicals and formulations: sales of ARYLEX™ broadleaf herbicide nearly doubled year-over-year; ISOCLAST™ insecticide resumed its momentum in the marketplace after achieving key regulatory milestones; and new corn herbicide formulations gained traction in North America. Dow continues to see soft demand for rice herbicides in China on generic pressure and high channel inventories.

Operating EBITDA was $326 million, up from $232 million in the year-ago period, driven by robust demand for the business’s novel Seeds and Crop Protection technologies and benefits from lower operating costs primarily driven by productivity actions.

Equity losses for the segment were $7 million, compared to equity losses of $11 million in the year-ago period.

Consumer Solutions

Consumer Solutions reported second quarter sales of $1.7 billion, up from $1.3 billion in the year-ago period, with gains in all businesses. The segment reported sales growth of 32 percent, primarily driven by the contribution of Consumer Solutions – Silicones. Excluding acquisitions, sales rose 8 percent with gains in all businesses and geographic areas. Volume grew 9 percent, with gains in all businesses and double-digit growth in Asia Pacific and Latin America, more than offsetting a 1 percent price decline due to currency headwinds.

Dow Automotive Systems delivered volume growth led by double-digit gains in Asia Pacific and Latin America, partly offset by a decline in the United States on softening industry production. Despite flat year-over-year light vehicle production globally, the business continued to grow well above the market due to sustained momentum for its innovative adhesives platform that benefits from trends favoring vehicle light-weighting to meet rising global fleet fuel economy standards and enhanced crash durability. Consumer Care delivered volume growth in all geographic areas, as well as double-digit gains in pharmaceutical and food applications that were driven by share gains and new business wins. Dow Electronic Materials reported double-digit volume growth in all geographic areas except Latin America, led by robust demand in semiconductor, organic light emitting diode (OLED) and printed circuit board applications. The business captured new wins across all of its technology platforms, which helped extend its above-market growth.

Operating EBITDA rose to a quarterly record of $541 million, up from $341 million in the year-ago period. This result represented the eighth consecutive quarter of year-over-year operating EBITDA growth. The year-over-year increase reflected the contribution from Consumer Solutions – Silicones, new commercial wins, market share gains, and a one-time gain related to the sale of the Company’s share in a non-core joint venture in Dow Electronic Materials.

Equity earnings for the segment were $15 million, down from $18 million in the year-ago period.

Infrastructure Solutions

Infrastructure Solutions reported second quarter sales of $2.8 billion, up from $2.1 billion in the year-ago period, with gains in all businesses. The segment reported sales growth of 34 percent, driven by the contribution of Infrastructure Solutions – Silicones. Excluding acquisitions, sales rose 7 percent with gains in all businesses and all geographic areas, except Latin America which was flat. Volume grew 3 percent, with gains in most businesses, and price increased 4 percent, with gains across all geographic areas.

Dow Building & Construction delivered modest volume growth driven by demand for methyl cellulosics and acrylics-based construction chemicals. Energy & Water Solutions captured strong volume growth led by reverse osmosis membranes and higher demand from the energy sector, particularly exploration and production and microbial control applications. Dow Coating Materials reported higher sales, as price increases gained traction in most geographic areas, partly offset by a modest decline in volume due to a delay in peak season activity in the northern hemisphere that extended some demand into the third quarter. Performance Monomers reported strong price and volume growth, driven by opportunistic merchant sales of acrylates and methacrylates.

Operating EBITDA increased to $556 million, up from $432 million in the year-ago period. The year-over-year increase reflected the contribution from Infrastructure Solutions – Silicones and volume growth. These improvements more than offset margin compression, as pricing initiatives lagged raw material cost increases, particularly for styrene-based products in Dow Building & Construction and Energy & Water Solutions.

Equity earnings for the segment were $28 million, compared to $45 million in the year-ago period, reflecting the ownership restructure of Dow Corning.

Performance Materials and Chemicals

Performance Materials & Chemicals reported second quarter sales of $2.6 billion, up from $2.3 billion in the year-ago period. The segment reported sales growth of 13 percent with gains in all geographic areas. Price rose 10 percent and volume grew 3 percent.

Polyurethanes sales grew double-digits with gains in all geographic areas. The business reported strong demand and price increases in downstream, higher-margin systems applications, as well as higher merchant sales of methylene diphenyl diisocyanate where short-term industry supply/demand fundamentals remained tight. Industrial Solutions sales increased in all geographic areas on continued demand into lubricants, crop defense and electronics processing applications, as well as ethylene oxide (EO) catalyst sales in Asia Pacific. Chlor-Alkali and Vinyl sales increased, led by double-digit gains in caustic soda and vinyl chloride monomer (VCM) in EMEAI resulting from tighter supply/demand fundamentals that offset lower VCM volume in North America due to planned maintenance activities at a supplier.

Operating EBITDA was $347 million, up from $295 million in the year-ago period, as pricing momentum and broad-based demand growth more than offset the impact of higher raw material costs.

Equity losses for the segment were $13 million, compared to a loss of $12 million in the same quarter last year, as higher earnings from the Kuwait joint ventures were more than offset by lower earnings from Map Ta Phut Olefins joint venture and greater losses from Sadara due to increased commissioning and startup activities.

Performance Plastics

Performance Plastics reported second quarter sales of $5.1 billion, up from $4.7 billion in the year-ago period. The segment reported sales growth of 8 percent, achieving its fourth consecutive quarter of year-over-year sales growth. Price rose 7 percent, primarily on higher co-product values, and volume grew 1 percent.

Dow Packaging and Specialty Plastics delivered volume growth on gains in most geographic areas, led by double-digit increases in EMEAI and Asia Pacific. Volumes from the new facilities in the Sadara joint venture supplemented Dow production to meet demand growth in emerging geographies. Volume grew in most end-markets as well, highlighted by food and specialty packaging and industrial and consumer packaging. Dow Elastomers achieved volume gains in most geographic areas, led by a double-digit increase in EMEAI on demand growth in automotive and infrastructure applications. Dow Electrical and Telecommunications volume declined as the business was impacted by extended turnaround activity.

Operating EBITDA for the segment was $1.1 billion, down from a second quarter record of $1.2 billion in the year-ago period, consistent with the Company’s previously stated modeling guidance. Price gains were more than offset by commissioning and startup costs associated with the new ethylene unit and derivative facilities in the United States, increased feedstock and energy costs and planned maintenance activity.

Equity earnings for the segment were $33 million, down from $45 million in the same quarter last year as reduced Sadara losses were more than offset by lower contributions from the Company’s joint ventures in Thailand.


Commenting on the Company’s outlook, Liveris said:

“Global economic activity is increasing, with notable strength in manufacturing, investment and trade. Robust growth fundamentals continue to fuel expansion in the U.S., led by the strength of the consumer. Europe’s improvement is expected to remain on a steady path. Latin America is stabilizing with particular upside from its agriculture sector, and Brazil is showing early signs of recovery from a prolonged recession, though political uncertainty persists. China and India continue to establish themselves as consumption economies, underpinned by fiscal stimulus and infrastructure investments, which are driving domestic growth.

“Dow remains well-positioned to capture consumer-led demand and deliver superior solutions to customers around the world through our narrower and deeper end-market focus, industry-leading innovation and broad geographic reach. Our track record of disciplined execution and outperformance these last several years underscores the resilience, agility and value creation power of our business model.

“Looking forward, our team remains focused and disciplined, with a sharp execution mindset on the successful close of our merger with DuPont, rapid achievement of the synergies and realizing the value-creation of the intended companies, as well as a strong focus on delivering the materials science company, with a portfolio that will be unrivaled versus its peer group. Going into the merger close, Dow is coming from a position of incredible strength, with a proven track record of success. We have the right strategy, the right long-term growth drivers and the right portfolio. Dow has never been better positioned to continue delivering for our customers, employees, communities and shareholders.”

Dow will host a live webcast of its second quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 9:00 a.m. ET on

(1) Operating earnings per share is defined as earnings per share excluding the impact of “Certain Items.” See Supplemental Information at the end of the release for a description of these items, as well as a reconciliation of ‘Earnings per common share – diluted” to “Operating earnings per common share – diluted.”

(2) EBITDA is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. Operating EBITDA is defined as EBITDA excluding the impact of “Certain Items.” A reconciliation of "Net Income Available for The Dow Chemical Company Common Stockholders" to “Operating EBITDA” is provided following the Operating Segments table.

(3) Prior year cash flow changed due to implementation of Accounting Standards Update 2016-09 and applied retrospectively.

(4) Working capital efficiency is defined as the combination of days sales outstanding (DSO) and days sales in inventory (DSI).

(5) “Adjusted Sales” is defined as “Net Sales” adjusted for acquisitions.

About Dow

Dow (NYSE: DOW) combines the power of science and technology to passionately innovate what is essential to human progress. The Company is driving innovations that extract value from material, polymer, chemical and biological science to help address many of the world's most challenging problems, such as the need for fresh food, safer and more sustainable transportation, clean water, energy efficiency, more durable infrastructure, and increasing agricultural productivity. Dow's integrated, market-driven portfolio delivers a broad range of technology-based products and solutions to customers in 175 countries and in high-growth sectors such as packaging, infrastructure, transportation, consumer care, electronics, and agriculture. In 2016, Dow had annual sales of $48 billion and employed approximately 56,000 people worldwide. The Company's more than 7,000 product families are manufactured at 189 sites in 34 countries across the globe. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at

Use of non-GAAP measures: Dow’s management believes that measures of income excluding certain items (“non-GAAP” measures) provide relevant and meaningful information to investors about the ongoing operating results of the Company. Such measurements are not recognized in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP measures are provided in the Supplemental Information tables.

Note: The forward looking statements contained in this document involve risks and uncertainties that may affect Dow’s operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission (“SEC”). These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that Dow’s expectations will be realized. The Company assumes no obligation to provide revisions to any forward looking statements should circumstances change, except as otherwise required by securities and other applicable laws.