MOSCOW (MRC) -- Dow Inc. topped analyst consensus with volume reaching pre-pandemic levels in all operating segments. The company reported fourth-quarter net income of USD1.3 billion compared with a year-ago loss of USD2.3 billion; year-ago results reflected the impact of a USD2.9 billion restructuring charge, reported Chemweek.
Operating EBIT was USD1.1 billion, up 2% year-on-year (YOY). Net sales of USD10.7 billion were up 5% YOY. Reported adjusted operating earnings were 81 cts/share, 17% above analyst consensus estimates as reported by Zacks.
"The big driver was strong volume and price," said Dow president and CFO Howard Ungerleider. "Year-on-year (Dow volumes) returned to pre-pandemic levels and there was also really strong momentum sequentially." Dow says sales increased 10% sequentially versus the third quarter as global economic recovery continued. Packaging and specialty plastics as well as industrial intermediates and infrastructure drove the growth, Ungerleider says. "Basically, volumes are back to where they were last year. And margins are pretty close. Not back for every business on margin, but at the enterprise level margins are back." The business areas that have lagged are on home and personal care, which has been "just a little bit of a drag on our performance materials business," Ungerleider said.
Overall volume increased 1% YOY led by demand growth in the packaging & specialty plastics as well as performance materials & coatings segments. Volume increased 2% sequentially driven by strong supply and demand fundamentals.
Packaging & specialty plastics segment net sales were USD5.1 billion, up 6% YOY. Operating EBIT was USD780 million, up 20% YOY on strong pricing. Volume increased 2%, primarily driven by olefin end-market demand, Dow said. Improved supply/demand fundamentals in polyethylene, was partly offset by lower ethylene and hydrocarbon co-product prices, Dow said. On a sequential basis, the segment recorded a 12% net sales improvement and a 4% volume gain, primarily driven by continued strong pricing momentum.
Industrial intermediates & infrastructure net sales were USD3.5 billion, up 8% YOY. Operating EBIT was USD296 million, up 34% YOY due to strong supply and demand fundamentals in polyurethanes & construction chemicals and at Sadara. Strong construction and manufacturing demand were offset by downward pressure from supply limitations, Dow said. Sales were up 14% sequentially and volume up 2% with significant price improvement in polyurethanes and robust demand in Industrial solutions.
Performance materials & coatings net sales were USD2 billion, approximately flat with the year-ago period. Operating EBIT was USD50 million, down 79% as volume growth in silicones and coatings applications, more than offset by price and volume declines in siloxanes. Segment sales were up 1% sequentially and volume down 2% on strong demand for silicones and acrylic monomers pricing momentum, more than offset by coatings seasonal demand declines.
“Dow enters 2021 with sequential momentum and is well-positioned for continued profitable growth in the ongoing economic recovery and improving industry cycle,” said Dow CEO James Fitterling. “As the market recovery broadens, we anticipate increasing margins as differentiated parts of our portfolio see improving demand."
Dow expects capital expenditures of USD1.6 billion in 2021, up about USD350 million. Dow also announced that it would accelerate digital investment programs, spending roughly USD400 million in 2021 and 2022. The company expects digital investment to provide more than USD300 million/year in EBITDA benefit by 2025.
As MRC wrote before, Dow will spend approximately USD294 to install and operate air pollution control and monitoring technology at 4 US chemical facilities as part of a settlement with The Department of Justice (DOJ), the US Environmental Protection Agency (EPA), and the Louisiana Department of Environmental Quality (LDEQ), according to a statement by the DOJ.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
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