Company News
October 29, 2024
Urethane Highlights from Covestro Call
Covestro AG (CVVTF) Q3 2024 Earnings Call Transcript
Oct. 29, 2024 3:00 PM ETCovestro AG (CVVTF) Stock, COVTY Stock
Covestro AG (OTCPK:CVVTF) Q3 2024 Results Conference Call October 29, 2024 9:00 AM ET
Company Participants
Ronald Koehler – Head of Investor Relations
Christian Baier – CFO & Member of Management Board
Carsten Intveen – Investor Relations Director
Conference Call Participants
Christian Faitz – Kepler Cheuvreux
Geoff Haire – UBS
Chetan Udeshi – JPMorgan
Christian Baier
Thank you, Ronald, and hello, and a warm welcome to our third quarter call. Before coming to the business of the last quarter, let me update you on the status of the announced transaction with ADNOC. The signing of the investment agreement on 1st of October marked the beginning of a multistep takeover process, which we believe is in the best interest of our shareholders, the company and all stakeholders.
Last Friday, ADNOC published the offer document. The publication of the offer document marked the start of the initial acceptance period, which will last until November 27, 2024. A potential additional acceptance period might last from December 3 until December 16, 2024. The Board of Management, together with the Supervisory Board, will issue their recent statement in due course.
But now let us focus on the highlights of the third quarter. We delivered a continued strong volume growth of 6.1% year-on-year. However, lower prices are still affecting sales, which came in at €3.6 billion. In line with our guidance, we achieved an EBITDA of €287 million. Free operating cash flow turned positive with €112 million and was in line with our expectations. As usual, with the Q3 call, we are narrowing our EBITDA guidance range.
Turning back to the business and the volume development in the third quarter of 2024. Year-on-year, the global sales volume continued to increase by 6.1%. This is driven by an improving demand but also constantly delivering on our reliability ambition after the issues in Europe in 2022 and 2023. The volume growth rate has slowed slightly compared to H1 2024 due to a baseline effect as we were able to ramp up production already during H2 2023.
Going through different industries. Construction showed the highest growth rate, with a low teens percent increase and Furniture with a mid-single-digit percent volume increase. Electro developed flattish and Auto exhibited a low single-digit volume reduction.
Let’s now look into the different regions. In EMLA, Construction and Furniture are showing continued strong growth based on improved availability of MDI and TDI since the resolved internal availability issues. However, Auto is on a slight decline and Electro on a significant decline. And almost comparable industry picture can be observed in North America. Construction developed positively with a significant increase. Furniture is flat, but like in EMLA, Electro and Auto are showing a slight decline. APAC again, continues with stable to positive growth across all industries, important to Covestro. Construction exhibited significant growth, Furniture and Electro slight growth and Auto was flattish.
Chetan Udeshi
Okay. This is always very complicated, I have to say. Maybe you should probably think about a better way of doing it. Can I ask one thing? I saw Dow mentioned last week that they are doing a strategic review of their polyurethanes assets. And I was just curious from Covestro’s perspective, is that something that Covestro can look at? Is it even practically possible from antitrust point of view? I’m just trying to explore what possibilities we might have for a possible consolidation, if any, in the European polyurethanes market, especially after what Dow said.
The second question, I was just curious and maybe this is just following up on the previous question. You said based on historical cycles, et cetera, you think next year could also be weak for Construction and Auto. And I’m just curious if you can point me to what exactly — or which historical cycles are you referring to?
Christian Baier
Chetan, I’m very happy to comment on maybe just on the last one with respect to Construction and Auto, we said that we have seen on the side of Furniture and Electro which have now stabilized. We have seen slightly longer periods of weakness from that overall perspective. And while this is not an academic read across into Construction and Auto, and there is a little bit of a perspective that this could be somewhat ongoing. That’s what we are properly preparing for, there is no better crystal ball that we have on those.
And certainly, when we look into Construction, especially from a seasonal perspective, we’d rather see that developing from Q2 next year onwards rather than from the beginning of the year. But that’s as far as it goes with respect to our expectations on that.
With respect to the topic of Dow, they have put their European pure assets into a strategic review. We are talking here about 3 MDI assets that they have spread across Europe. We are talking about polyol assets on that perspective. Let’s see what the outcome will be of the review that they are going forward. We certainly, in any of the movements in the overall industry would be open-minded on the various pieces that would be developing and watching that situation closely.
October 29, 2024
Covestro Q3 Results
Increased profits in challenging market environment
- Group sales remain stable at EUR 3.6 billion (+1.0%)
- EBITDA increases to EUR 287 million (+3.6%)
- Net income reaches EUR 33 million
- Free Operating Cash Flow is at EUR 112 million (–63.6%)
- Investment Agreement with ADNOC signed
- Guidance for 2024 fiscal year narrowed within given ranges
In the third quarter of 2024, Covestro continued to increase its volumes sold, particularly in the EMLA and APAC regions. Compared to the same quarter of the previous year, Group sales remained stable at around EUR 3.6 billion, as lower raw material prices led to lower selling price levels (previous year: EUR 3.57 billion). Compared to the third quarter of 2023, the Group’s EBITDA increased by 3.6 percent to EUR 287 million (previous year: €277 million), thus falling within the expected range of EUR 250 million to EUR 350 million. Net income reached EUR 33 million (previous year: EUR –31 million). Free operating cash flow decreased to EUR 112 million (previous year: EUR 308 million), primarily due to lower operating cash flows.
“We concluded the third quarter of the year with higher sales volumes and improved earnings,” said Dr Markus Steilemann, CEO of Covestro. “Nevertheless, the current market environment remains challenging. Our focus is therefore clear: We continue to do our homework, focus on the levers we can control and consistently implement our ‘Sustainable Future’ strategy. In doing so, we not only lay the foundation for future success and sustainable growth, but also make steady progress towards becoming fully circular.”
Guidance for 2024 further narrowed within given ranges
In light of the continued challenging economic environment, Covestro has narrowed its guidance for the 2024 fiscal year regarding expectations for EBITDA and ROCE above WACC.
The Group now anticipates EBITDA between EUR 1.0 billion and EUR 1.25 billion (previously: between EUR 1.0 billion and EUR 1.4 billion). For ROCE above WACC, Covestro now expects a range between –7.0 and –5.0 percentage points (previously: between –7.0 and –4.0 percentage points) for the financial year 2024. Regarding GHG emissions (measured as CO2 equivalents), Covestro continues to expect a figure between 4.4 and 5.0 million metric tons. Covestro also continues to expect a Free Operating Cash Flow between EUR –100 and EUR 100 million.
“Overall, global demand is intact but remains at a low level. We continue to face challenges in various industries and regions,” says Christian Baier, CFO of Covestro. “Nonetheless, we were able to slightly increase our EBITDA, indicating that our measures for efficiency and plant reliability are working. However, the economic environment remains challenging, and we have therefore narrowed our guidance for the full year accordingly.”
Investment Agreement with ADNOC supports execution of “Sustainable Future” strategy
As announced in an ad-hoc release on October 1, 2024, Covestro has on that day signed an Investment Agreement with entities of the ADNOC Group, including ADNOC International Limited (“ADNOC International”) and its indirect subsidiary ADNOC International Germany Holding AG (“Bidder”). The agreement stipulates, among other items, that the Bidder will make a public takeover offer for all outstanding shares of Covestro at a price of €62.00 per share. In addition, ADNOC International is committing itself to fully supporting the Company’s “Sustainable Future” strategy and intends to fully support Covestro in further executing on this strategy. To this end, the Bidder shall subscribe to new Covestro shares at the offer price via an increase of the Company’s share capital by 10% under simplified exclusion of subscription upon the completion of the transaction. This will result in an amount of €1.17 billion proceeds at an offer price of €62.00 which Covestro will use to foster the further implementation of its growth strategy.
On October 25, 2024, the Bidder, following approval by BaFin, has published the corresponding offer document in relation to all outstanding Covestro shares at an offer price EUR 62.00 per Covestro share. The Board of Management and the Supervisory Board of Covestro will now carefully review the offer document and issue a reasoned statement pursuant to Section 27 WpÜG in due course. Subject to the review of the offer document, the Board of Management and the Supervisory Board assume that they will recommend the acceptance of the offer to the Company’s shareholders.
Further milestones on the road to climate neutrality achieved
In the third quarter of 2024, Covestro further increased the share of renewable energies in its energy mix, thereby achieving another important milestone on the road to operational climate neutrality by 2035. In July 2024, Covestro signed a long-term power purchase agreement (PPA) with bp to supply its sites in Spain with solar energy. The contract has a term of ten years and increases the share of renewable energy from less than ten percent to around 30 percent. As a result, a significant share of the electricity consumption of Covestro’s main production site in Tarragona, Spain, is now also covered by renewable sources.
EBITDA in the Performance Materials segment significantly increased
In the Performance Materials segment, Covestro increased its sales by 4.1 percent to EUR 1.78 billion (previous year: EUR 1.71 billion) in the third quarter of 2024. This was primarily driven by higher volumes, especially in the EMLA region. These higher volumes contributed to a significant increase in EBITDA of 47.1 percent to EUR 125 million (previous year: EUR 85 million). Free Operating Cash Flow amounted to EUR 111 million (previous year: EUR 317 million) due to a significantly lower release of funds from working capital compared to the same quarter of the previous year.
In the Solutions & Specialties segment, sales in the third quarter of 2024 decreased by 2.0 percent to EUR 1.77 billion (previous year: EUR 1.81 billion). This was primarily due to a demand-related decline in average selling prices, which higher volumes were unable to offset fully. As a result, the segment’s EBITDA fell 15.4 percent to EUR 208 million (previous year: EUR 246 million). Free Operating Cash Flow was EUR 101 million (previous year: EUR 185 million), primarily due to cash being tied up in working capital, as opposed to a release of funds in the same quarter last year, and lower EBITDA.
Challenging environment weighs on results in the first nine months of 2024
In the first nine months of 2024, Covestro’s sales remained largely stable at EUR 10.8 billion compared to the same period of the previous year (previous year: EUR 11.0 billion). The increase in volumes across the Group did not offset the demand-related decline in average selling prices in the first nine months. That is also reflected in the EBITDA for the first nine months of 2024, which fell by 7.2 percent to EUR 880 million (previous year: EUR 948 million). Net income fell to –€74 million (previous year: –€11 million). Free Operating Cash Flow for the nine-month period amounted to –€164 million (previous year: €159 million).
https://www.covestro.com/press/increased-profits-in-challenging-market-environment
October 27, 2024
Highlights from Olin’s Investors Call
Olin Corporation (OLN) Q3 2024 Earnings Call Transcript
Oct. 25, 2024 12:37 PM ETOlin Corporation (OLN) Stock
Q3: 2024-10-24 Earnings Summary
EPS of -$0.15 misses by $0.18 | Revenue of $1.59B (-4.90% Y/Y) beats by $8.64M
Olin Corporation (NYSE:OLN) Q3 2024 Earnings Conference Call October 25, 2024 9:00 AM ET
Company Participants
Steve Keenan – Director of IR
Ken Lane – President and CEO
Todd Slater – CFO
Ken Lane
Thanks, Steve. And good morning, everyone. Olin’s third quarter was significantly impacted by operational disruptions as a result of hurricane Beryl damage. I want to thank our team at the Freeport site for their efforts to restart our assets, which were shut down in early July due to the hurricane. Multiple plants are now returning to normal operations. The Olin team worked through the difficult time safely and expeditiously while facing hurricane related challenges at home and in their communities. Now turning to our third quarter results on Slide 3. The quarter unfolded slightly better than expected for our chemicals businesses, excluding the impact of Hurricane Beryl, which came in at $110 million versus our initial estimate of $100 million during the quarter. We will have some residual hurricane impact in the fourth quarter due to additional downtime and the completion of some less critical infrastructure repairs. Excluding the impacts from Hurricane Beryl, chlor alkali products achieved a solid quarter with sequential improvement. The aftermath of recent hurricanes also drove third quarter demand for bleach and hydrochloric acid higher in support of water treatment and cleaning end uses. During the third quarter, caustic prices increased supported by some demand improvement in export markets as well as continued constraints in supply related to global industry planned and unplanned outages. Epoxy prices and margins continue to slowly improve, though volumes remain weak. We remain focused on delivering cost reductions during a very challenging market environment. Our third quarter epoxy resin volumes were sequentially lower as we started our planned start at Germany turnaround. Third quarter Winchester commercial ammunition volume fell significantly short of our expectations. Due to softness in consumer demand at our customers’ retail outlets, retailers are now slowing their purchases to normalize inventories by year end. This headwind is partially offset by continued strength in defense demand.
Turning to Slide 4. Let’s take a closer look at our chlor alkali and vinyls business. With Hurricane Beryl behind us, our Freeport plants are returning to normal operations. Caustic soda is a strong side of the ECU. And with global industry supplies constrained, Olin will stay focused on our value first commercial model to meet demand. Caustic soda demand continues to be strong with alumina and pulp and paper leading the way. South American demand has been the most robust with two recent world scale pulp and paper plant startups. Index pricing for US Gulf Coast caustic exports finished the third quarter up by over $100 sequentially, a 30% improvement over the second quarter index. North American merchant chlorine demand remains steady with positive trade press outlooks for vinyls and titanium dioxide heading into 2025. We expect agricultural related consumption to pick up seasonally late in fourth quarter. Chlorine into water treatment is expected to slow seasonally and pick up again during the first quarter. Our EDC participation remains disciplined. EDC values are up slightly year-over-year in line with PVC, but we remain diligent to keep our EDC position value driven.
For a look at our epoxy business, let’s turn to Slide 5. During the third quarter, we began our planned Stade, Germany outage, which occurs once every six years and is proceeding on plan and budget for completion in the fourth quarter. As the largest and only integrated producer of epoxy in the European Union, Stade remains an important asset for Olin and that value is expected to increase as we realize contractual cost savings in 2026. Despite improving margins, resin and formulated solution volumes remain challenged in both the US and Europe. The inflow of China subsidized epoxy continues unabated even with local production costs rising in Asia on tightening glycerin feedstocks. In September, the US International Trade Commission announced preliminary countervailing duties for epoxy imports, which only impacted China. We hope the US ITC’s upcoming November antidumping duties will level the playing field across Korea and Taiwan and appropriately value domestic production of these critical materials and stem the flow of unfairly subsidized Asian imports. In parallel, the European Union is also evaluating epoxy antidumping duties with preliminary determinations expected in mid-2025.
Arun Viswanathan
And then if I could just ask a couple of follow-ups on that. So I guess when you think about Epoxy, it sounds like you’re expecting a date in November, where I get maybe an update on the antidumping situation. I guess, what are your expectations for that? And does that maybe drive some optimism about that business for ’25? And I guess when you think about that, if you were to add back some of your impacts, the 135. Is that the only driver that you really see adding back for ’25 or would there be some other potential uplift to ’25 EBITDA?
Ken Lane
Well, obviously, one of the uplifts is going to — we’re not planning on having another Hurricane Beryl, which is certainly a good thing. Yes, we are expecting the US government, the ITC to make an announcement here in early November. It’s the government, I don’t want to get too optimistic or too pessimistic. We’ve done all that we can to make the case that this is unfair trade that’s going on. And hopefully, you had a chance to take a look at the op ed that I had written a week or so ago, but we’re doing all that we can to support the case. We’ll see where the ITC ends up. We have been marginally successful throughout the year of steadily increasing pricing. However, I’ll tell you that it’s still in the face of a very strong volume that’s continuing to come in from Asia and that’s still very concerning. But hopefully, we’re going to get some favorable outcome here in early November. But it’s — right now, I can’t give you a guess whether it’s going to be positive or not.
Aleksey Yefremov
And then in epoxy, you were $200 per ton price increase. Can you tell us how successful it was so far and what do you expect from that in Q4 and Q1?
Ken Lane
So we announced that for October 1st and we are optimistic we are seeing some traction on that price increase in Q4. I mentioned it a minute ago, we’re still seeing the volume coming in from Asia. So I think some people are starting to maybe react a little bit to concerns around what may happen with tariffs. But we have seen some success in implementing that price increase. It’s really too early to say for the quarter. But I do think we’re going to see some price gains in epoxy resins in Q4. But it did not make up anywhere close to where we need to be to get back to a reasonable level of margin there.
Steve Byrne
And maybe just one more portfolio related question, and that is, in a year from now when the contract with Dow and have you given more thought and have a conceptual interest in what to do with that chlorine capacity and low cost ethylene. Do you have some thoughts on that?
Ken Lane
Steve, yes, as you can imagine, when we’re working through the strategy that we’re thinking about for the company longer term and the Investor Day that’s coming up, you can imagine that, that’s going to be a topic that we will talk about is our portfolio, not just in terms of businesses but also assets going forward. So we’ll be able to share more with that — more with you on that at the Investor Day in December.
Mike Leithead
And then second, Dow initiated a strategic review yesterday of some of their European assets, and I believe that includes their Stade data complex. I guess, one, are there any Dow assets there that would be of interest and fit to Olin? And two, if they decide another outcome there, how, if at all, does that impact your Stade operations?
Ken Lane
Mike, I really don’t know enough. I saw the announcement just like you did but I don’t know enough about what they’re doing to make any comment there. Stade is a site that has been really challenged for us in our portfolio and we’ve been able to work through that without to get to an agreement that at least helps to improve the viability of that site for Olin. That really doesn’t kick in until 2026. As you can imagine, we’re constantly talking to Dow because we’ve got such a strong relationship with them in terms of interdependency and we’ll continue to have discussions with them. But I don’t have anything that I can comment on. I just don’t know enough about what they’re doing.
John Roberts
And then why do you think the higher glittering costs in China aren’t having any impact on pricing?
Ken Lane
Can you repeat that?
John Roberts
We have higher glittering costs to the Chinese exporters, it doesn’t seem to be having any impact on pricing…
Ken Lane
Well, I think that’s exactly supporting our case for the tariffs. They continue to they continue to produce the low cost and push that volume into the market, which is then allowing other Epoxy resin producers to export below cost. And that’s exactly the case that we’re making to the US ITC and to the EU.
John Roberts
Why don’t you think the pricing is even lower then if glistering costs don’t matter?
Ken Lane
I think it’s related to the amount of supply that they brought on. So they want to operate their assets. They’ve added a lot of capacity and they want to run those assets and they’re willing to do it at a loss. That’s all I can tell you.
David Begleiter
Staying on epoxy. How do imports in ’24 into the US compare versus ’23?
Ken Lane
Well we’re still seeing significantly higher import volumes and that has really been unabated. So we’re not seeing any in that tide. It’s continued to grow. And as I just mentioned to John, as they add capacity, they’re going to continue to push that volume into the market. We’re not seeing that slow down at all.
David Begleiter
But do you have a number for the increase year-over-year?
Ken Lane
I don’t, Dave, but I know that it has increased, but I don’t have a percentage.
October 24, 2024
Urethane Highlights from Dow Investors Call
Dow Inc. (DOW) Q3 2024 Earnings Call Transcript
Oct. 24, 2024 11:16 AM ETDow Inc. (DOW) Stock
Q3: 2024-10-24 Earnings Summary
EPS of $0.47 misses by $0.00 | Revenue of $10.88B (1.39% Y/Y) beats by $200.05M
Dow Inc. (NYSE:DOW) Q3 2024 Earnings Conference Call October 24, 2024 8:00 AM ET
Company Participants
Andrew Riker – IR, VP
Jim Fitterling – Chair and CEO
Jeff Tate – CFO
Conference Call Participants
Vincent Andrews – Morgan Stanley
Hassan Ahmed – Alembic Global
Richard Garchitorena – Wells Fargo Securities
Jeff Zekauskas – JPMorgan
Bhavesh Lodaya – BMO Capital Markets
David Begleiter – Deutsche Bank
Steve Byrne – Bank of America
Josh Spector – UBS
Chris Parkinson – Wolfe Research
Patrick Cunningham – Citi
Kevin McCarthy – Vertical Research Partners
Frank Mitsch – Fermium Research
John Roberts – Mizuho
Mike Leithead – Barclays
Duffy Fischer – Goldman Sachs
Matthew Blair – TPF
Aleksey Yefremov – KeyBanc
Laurence Alexander – Jefferies
Arun Viswanathan – RBC Capital Markets
Jim Fitterling
Thank you, Andrew. Beginning on Slide 3, our cost advantage footprint in the Americas continues to provide strong competitive edge capturing demand growth in attractive markets and regions. In the third quarter, Team Dow delivered our fourth consecutive quarter of year-over-year volume growth. We delivered this despite a soft macroeconomic environment, primarily in Europe and China, as well as an unplanned cracker outage in Texas, which has been successfully restarted and is running well.
Net sales in the Q3 were $10.9 billion, this is up 1% versus the year ago period led by higher demand and local prices in the United States and Canada. Volume increased 1% versus the year ago period and prior periods. Sequentially, we saw gains in Packaging and Specialty Plastics and Industrial Intermediates and Infrastructure.
Local price was flat year-over-year as gains in Packaging and Specialty Plastics were offset by decreases in Performance Materials and Coatings. Sequentially, local price was down 1% due to minor declines across all segments. Operating EBIT was $641 million, up $15 million year-over-year, reflecting higher integrated margins in Packaging and Specialty Plastics, which were partly offset by the impact of the unplanned cracker outage in Texas and higher planned maintenance activity. Cash flow from continuing operations was $800 million down year-over-year, primarily due to higher inventories to support both sales growth and labor related supply chain disruptions.
Shareholder remuneration for the quarter was $584 million including dividends and share repurchases. In addition, we progressed our long-term growth strategy including signing a long-term agreement with Linde for the supply of clean hydrogen for our Path2Zero project in Fort Saskatchewan. We also completed the acquisition of US based polyethylene recycler Circulus. This will add capacity of 50,000 metric tons of recycled materials annually to Dow’s portfolio.
Now turning to our operating segment performance on Slide 4. In the Packaging and Specialty Plastics segment, local price increased year-over-year led by higher polyethylene prices in all regions except Latin America, which was flat. Volume was flat year-over-year as higher demand for functional polymers in all regions was offset by lower polyethylene volumes. Operating EBIT was $618 million an increase of $142 million year-over-year. This was primarily driven by higher integrated margins, which were partly offset by the impact of the unplanned cracker outage I mentioned earlier.
Moving to the Industrial Intermediates and Infrastructure segment, local price was flat year-over-year. In addition, volume was down 2%. This was driven by lower volumes in Polyurethanes and Construction chemicals, which were primarily due to a force majeure in MDI following a third-party supplier outage.
Operating EBIT decreased $74 million versus the year ago period. Results were driven by higher planned maintenance activity and lower integrated margins, which were partly offset by improved equity earnings. And in the Performance Materials and Coatings segment, local price declined year-over-year, while volume was up 5% with gains in both businesses and across all geographic regions. Operating EBIT was $140 million down $39 million compared to the year ago period, driven by higher raw material costs, which were partly offset by higher volumes.
Moving to Slide 5. The strength of Dow’s differentiated portfolio is defined by our strategic and purpose built asset footprint which leverages low cost feedstock positions, primarily in the Americas. Our growth investments are concentrated in higher value businesses and regions, particularly where demand is resilient and we have a competitive cost advantage. Over the past few years, we’ve demonstrated our commitment to operating with the best owner mindset by taking proactive actions with select higher cost assets aligned with the evolving market dynamics.
Since 2023, we have undertaken more than 20 asset actions. These include targeted rationalization of our global polyols capacity, shutting down our propylene oxide unit in Freeport, Texas in 2025 to reduce lower value merchant PO exposure, strengthening our coatings footprint with select asset closures and announcing the sale of our laminating adhesives business for $150 million including two manufacturing sites in Italy, which we expect to finalize in the fourth quarter of this year.
Overall, these actions have been primarily focused on our industrial, intermediates and infrastructure segment and in the EMEA region. On Slide 6, current market dynamics are impacting Europe, including continued soft demand, coupled with a persistent lack of long-term regulatory policy. This ongoing absence of clear, consistent, and competitive regulatory policy in Europe has resulted in many challenges for our industry.
These challenges have been acknowledged in statements by EU government leaders, top economists, and our peers. And while a demand recovery in other parts of the world was expected to provide swift upside across the markets we serve, this alone is unlikely to be enough in Europe. Given these dynamics, we’ve begun a strategic review of select European assets, primarily those in our polyurethane business. This review includes all value-creating options for these assets and currently consists of approximately 20% of our sales in the EMEA region.
We expect to complete this review by mid-2025. We continue to engage with governments both directly as well as through our leadership in trade associations to improve the industry’s overall competitiveness in the region. Decisions regarding the strategic review, similar to our prior actions, will focus on strengthening Dow’s global portfolio. This enables us to invest in the most attractive opportunities and create long-term value growth for our shareholders.
Hassan Ahmed
Good morning Jim. Just a question around some of the sort of review work that you guys are doing in Europe. You guys specifically talked about polyurethanes. I’m just trying to sort of get a better sense of all the moving parts with regards to how you see the polyurethane cycle sort of panning out. Obviously, we’ve seen or about to see some assets change hands within the global polyurethane market. The destocking was particularly severe in polyurethanes, but the supply side seems a bit tepid. So as sort of you sift through all of these moving parts, how do you see the polyurethane market sort of coming out on the other side?
Jim Fitterling
Good morning Hassan. Actually, we’re still poised for a very good recovery in construction and durables markets, which really drive a lot of what’s going on in polyurethanes. I’d add automotive on top of that because I think automotive has been under some pressure in Europe. So I agree with you, there is no signs that there’s any stocking and destocking has run its course. But I think we are waiting for that obvious turn in the economy that gets people moving into those segments.
And those assets in Europe is really a portfolio shift move. It really has nothing to do with the business. Polyurethanes is a good business, a pretty diverse downstream markets. We’ve got good positions there. And as I mentioned, we’re thinking about 20 asset actions so far across the globe, mostly in II&I, which is really to tighten up the footprint and get our capacity focused on our lowest cost assets there. So I think it is strengthened, both polyurethane business and also the coatings business as well.
Thank you, good morning. Jim, on the European assets under review, are they EBITDA positive? And if so, how much? And if you do close both of your MDI plants in Europe, would you still look to supply Europe MDI from your plants in Saudi and Texas? Thank you.
Jim Fitterling
Yes, good morning David. I don’t have a specific number to give you on the European assets right now, but they are EBITDA positive. They are good cost positions in the European market. Again, we are looking at all value-creating opportunities. I don’t believe – I don’t want to preclude anything, but I don’t believe shutting down MDIS, that is going to be a value-creating opportunity, but we’re going to look at everything.
John Roberts
Thank you. Jim, you’ve got chlorine integration in Europe. So how separable are the decisions you’re looking at in Europe for polyurethanes versus the [cab] (ph) assets?
Jim Fitterling
They’re not, John. Obviously, we’re not going to do anything without close contact with our own chlorine assets but also with our partners in Europe. And so we’ll keep a close eye on that. Chlorine PO integration is critical for us, and so we will make sure we’re eyes wide open to that.
Aleksey Yefremov
Thanks good morning everyone. Jim, I was quite surprised to see about $100 million in EBITDA for II&I into this quarter. The segment started the year pretty strongly with $234 million, and then EBITDA continued to soften. Could you give us, just to reflect on this year, what product specifically or regions maybe did not perform as well? And what do you expect next year here?
Jim Fitterling
Yes. So obviously, we had Glycol-2 up and running, so that was to a positive. We had price pressure on PO Polyols and we had lower volumes in MDI. I mentioned in the opening that we had a third-party outage in North America, which supplied industrial gas to our MDI process there, the plants back up but still running at lower rates. And then look, the other thing that happened when Texas-8 was out, Texas-8 produces propylene for us as well. And so when we had Texas-8 out, we had to go into the market to get some of that propylene so that was a higher cost.
So I think it was on to one-time, the MDI issue is a one-time, which will correct itself. The PO polyols that was a big driving force around the decision to tighten up the footprint in Freeport. So as we go forward, we don’t have as much length in PO, which brings the North American market more in the balance. So I think, as we move forward, it is polyurethanes in North America, that was the bigger slowdown and drag in the quarter.
Arun Viswanathan
Hi, guys great. Thanks for taking my question. So I guess I just wanted to ask about — there’s been a lot of portfolio reviews, especially of European assets at this point. So just wondering if you’ve gone through some kind of analysis here, assuming any of those shutdowns happen or potentially portfolio reviews result in shutdowns. How much maybe capacity could be coming out of the industry and P&SP in — as you look into ’25.
And maybe if you can give us your thoughts as well on PMC kind of global supply demand as well, just because we’ve been mired in weakness on the coating side for a while, from a demand standpoint, but maybe there is some green shoots with rates coming down. So do you see any improvement in operating rates on the PMC side as well. So just maybe you could get your comments on both P&SP and PMC utilization as you look into ’25? Thanks.
Jim Fitterling
Yes good morning Arun. Look, I think, again, our portfolio work in Europe is around polyurethanes. And as I mentioned before, it really isn’t driven primarily by shutdowns, we’ll look at that. But I think we’ve done a lot to bring smaller assets down and bring that capacity into our low-cost locations. It’s really looking at what is there a better owner for the portfolio? Does that allow us to continue to focus on our Invest for Growth businesses, which went from Investor Day, you’ll remember we’re P&SP our silicones business and also our Industrial Solutions business.
October 24, 2024
Dow Q3 Results
Dow’s stock rises as Q3 sales beat estimates
Oct. 24, 2024 9:20 AM ETDow Inc. (DOW) StockBy: Rob Williams, SA News Editor
Dow’s (NYSE:DOW) stock rose 1.5% on Thursday morning after the chemical maker reported third-quarter results.
Adjusted earnings were $0.47 a share, in line with the consensus estimate.
Net sales rose 1% from a year earlier to $10.88 billion in the third quarter, led by higher sales in the United States and Canada. Analysts on average forecast sales of $10.68 billion.
The company last month had warned third-quarter sales would be less than previously forecast.
“Our cost-advantaged footprint in the Americas continues to provide a strong competitive edge, enabling Dow (DOW) to capture demand growth in attractive markets,” Jim Fitterling, chair and chief executive of Dow (DOW), said in a statement. “However, a meaningful recovery has yet to materialize in Europe and China.”
Sales grew 1.1% from the prior year in its packaging and specialty plastics business, and by 3.9% for its performance materials and coatings unit. However, sales fell 2.4% in its industrial and infrastructure unit.
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