Company News
August 12, 2024
FM in Europe
Huntsman Declares Force Majeure on MDI From Netherlands Site — OPIS
Published: Aug. 6, 2024 at 12:51 p.m. ET
U.S. chemical manufacturer Huntsman declared force majeure Monday on its methylene diphenyl diisocyanate (MDI) supply from its Rozenburg plant, in the Netherlands, a company spokesperson told OPIS Tuesday.
“Huntsman declared force majeure, effective Monday, Aug. 5 , for the supply of MDI and MDI-based products manufactured at the facility,” the spokesperson confirmed to OPIS.
The producer was operating the MDI unit at reduced rates, “due to unforeseen circumstances…resulting from the declaration of force majeure by several of our Rotterdam cluster partners,” Huntsman said.
It is not yet clear how long the force majeure will remain in place.
The company operates two MDI units at the site near Rotterdam, which have a total capacity of 470,000 metric tons/year, according to data from Chemical Market Analytics, by OPIS, a Dow Jones company.
“We continue to work diligently to minimize the impact of this event, and we will restore normal operations as quickly and as safely as possible once our partners’ issues have been resolved,” the producer said.
The two MDI production units are a key part of Huntsman’s global chemical production network, used to manufacture various polyurethane products.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
August 1, 2024
Urethane Highlights from BASF Investors Call
BASF SE (BASFY) Q2 2024 Earnings Call Transcript
Jul. 26, 2024 3:52 PM ETBASF SE (BASFY) Stock, BFFAF Stock
BASF SE (OTCQX:BASFY) Q2 2024 Results Conference Call July 26, 2024 2:30 AM ET
Company Participants
Stefanie Wettberg – Senior Vice President of Investor Relations
Markus Kamieth – CEO & Chairman of the Board of Executive Directors
Dirk Elvermann – Member of the Board of Executive Directors, CFO & Chief Digital Officer
Markus Kamieth
Yes. Thanks, Stefie. Good morning, ladies and gentlemen. Dirk and I welcome you to our analyst conference call. And it’s my first one since taking over as the Chairman at the end of April. And I’m really looking forward to many more of those calls and our discussions about BASF.
And you might have seen that something’s changed, some things stay the same. The music, at least, we have not changed while you were in the waiting line.
We will provide you with details on our business development in the second quarter, and we will highlight some notable aspects today.
Let’s start with an overview slide. Overall, the development of EBITDA before special items in Q2 was in line with our expectations and the analyst consensus. We saw a continuation of the dynamics of the first quarter marked by positive volume momentum across most of our businesses.
At BASF Group level, volumes, excluding precious and base metals, increased by 2.4% compared with Q2 2023. Sales declined by 7% to €16.1 billion, mainly due to lower prices. However, price pressure has eased.
We achieved an EBITDA before special items of €2 billion, which is at prior year quarter level.
Overall, stronger earnings in our Chemical businesses were offset by considerably lower earnings in the Agricultural Solutions segment due to a difficult market environment.
Here is a snapshot of how the markets and our segment volumes and specific margins developed in the second quarter. In a slightly improving market environment for base chemicals, we were able to realize strong volume growth in both divisions in the Chemicals segment. EBITDA before special items increased considerably despite slightly lower segment margins due to a margin decline in the Intermediates division.
In the Petrochemicals division, margins improved due to temporary supply constraints at competitors.
The Materials segment benefited from slightly higher volumes, particularly in Performance Materials in an overall improving market. A considerable increase in margins was largely driven by a few product lines in the Monomers division, especially in the ammonia value chain.
Industrial Solutions operated in an overall stable market environment. Nonetheless, both divisions achieved considerable volume growth and margin expansion. In particular, our Dispersions & Resins division contributed to the strong performance of the segment.
The global automotive production was basically flat in the second quarter. In this environment, volumes in our Surface Technologies segment had a considerable negative impact on EBITDA before special items. In particular, Environmental Catalyst and Metal Solutions recorded lower volumes. Overall, margins improved mainly due to a continued strong performance of our Coatings division.
The market environment for Nutrition & Care further improved in the quarter. The considerable increase in EBITDA before special items compared with the prior year quarter was supported by higher volumes in both divisions as well as margin expansion. In particular, in our personal care specialties and vitamins businesses.
The crop protection market is characterized by continued destocking and faced adverse weather conditions that negatively affected business development in our Agricultural Solutions segment. The segment’s EBITDA before special items was negatively impacted by considerably lower volumes and margins.
The factors I have just described led to the following developments in EBITDA before special items compared with the prior year quarter. Despite the considerably lower earnings in Agricultural Solutions segment, EBITDA before special items of BASF Group was at the prior year quarter level. While the Materials and the Surface Technologies segments recorded slightly lower earnings, we were able to increase EBITDA before special items considerably in the Industrial Solutions, Chemicals and Nutrition & Care segments as well as in Other.
Christian Kepler
All right, good. To Markus, well done for your first official analyst call. Two questions, please. First of all, what is your current order book visibility in your more traditional Chemical activities? Would it be fair to assume 4 to 6 weeks? And what kind of demand trends do you see at present in automotive, construction and electronics out of this order book? And then I’ll come back with the second question.
Markus Kamieth
Yes. Thanks, Christian. Analyst call is not over yet, so let’s wait, I would guess. So overall, I think the current order book visibility is tough to always put one number in there. But it hasn’t changed dramatically. It has been shorter than historically visible already for quite some time, and I would say 4 to 6 weeks is probably a good guess. Some businesses are a little bit longer, of course, some businesses less. But overall, across our Chemicals business, that’s a pretty good assumption.
I comment a little bit on trends that we see. Currently, I mean, heading into the third quarter, I already said in my speech that the current momentum that we see — that we saw in the second quarter already shapes up to be valid for the third quarter as well. So in most industries, rather sideways movement on demand and that also relates to the segments that you have pointed out.
Automotive has been, for the first half of the year, flat compared to prior year. And we expect the second half to be even a bit more under pressure, so maybe even a slightly lower number compared to last year’s number if you look at the global picture. And this comes with a bit of a conservative look also on the inventory developments in the automotive history, which are increasing, especially in Asia. So a bit of a cautious approach there. Overall, we expect build numbers, automotive, to be in line with last year, roughly around 89 million cars.
Construction overall, also, I would say, unspectacular development right now. A little bit positive developments in the more commercial construction segment, and infrastructure is also doing okay in all regions. But the residential construction market is depressed, especially in Europe and in North America. And here, the high interest rate environment and the inflationary environment certainly are not going away so quickly.
And then electronics, I have to say also, here, this is one of the few exceptions where we see continued good growth, especially in the more — in the semiconductor/chips segment. When you go into the consumer electronics segment, I would say also here, rather a sideways movement because also here we see consumer spending and consumer confidence in most areas not really growing strongly.
Peter Clark
Nice to hear you, Markus. I’ve got one clarification and two questions. The first clarification, in September, we’re going to hear from the divisions as well as the update on Ludwigshafen.
And then the questions you announced the ring-fencing in December. So we’re almost 9 months on from the ring-fencing of the Verbund by the — versus the pure-play business. Just wondering how that’s progressing and we’re still looking at 2026.
And then on the fixed cost performance. Obviously, in the first quarter, I was certainly encouraged that fixed costs pretty much went down in every segment. A couple of segments saw them up. I know the one-off effect is preparing for a shutdown, et cetera. But just getting on top of that fixed cost, again, as we go forward from here and making sure all the divisions or segments start to see them come down.
Markus Kamieth
I’ll try to take the first two questions, but I didn’t quite get the second one, so you might have to help me with that, Peter. So yes, to clarify on the Capital Markets Day, we are going to give you, let’s say, in the keynote strategy update so where the Board sees the priorities for BASF Group going forward, what’s our strategic pathway. We’re going to go into the divisional details — into the segments. And we’re also going to give an update on what we call target picture Ludwigshafen, so basically where we will — how and where we will develop the site towards short term and long term.
The question on the capital market reference to last December, I didn’t quite get that question acoustically. Could you repeat that, please, Peter?
Peter Clark
Yes, the ring-fencing was announced in December last year, obviously, with the target date of ring-fencing Verbund operations from Ag, Coatings, et cetera, by ’26. Just wondering how that’s progressing because we’re 9 months in from that announcement.
Markus Kamieth
Okay. I didn’t quite get that word ring-fencing. That’s a word I would not have used. But anyway, I get your question. Yes, we are well underway with our structural measures. As we have announced, we are in the course of putting our non-Verbund businesses into a more independent structure with regards to legal entities, but also on — in the process environment, IT, for example, putting them on separate SAP instances and so forth. And these projects are all progressing well and in line with our original plan. So no further updates or news there.
Georgina Fraser
I’ve got two questions. The first one is, would you agree that given the weak local demand and a lot of extra capacity that China has been responsible for a lot of the pricing pressure that you’ve seen in the first half of the year and that we might be starting to see a stronger antidumping duty response from other producing regions that are feeling pressure from China. Does your expectation of improving pricing power factor in a tighter global tariff regime? And just any comments that you could give on the impact of possible tariffs for BASF.
And then my second question is a bit more philosophical, and it’s following up on the question that Peter asked about the Verbund. What do you think is the reason that we haven’t seen more recent players in the chemical market, thinking particularly in China and Asia, adopt the same Verbund business model and the reason that some players in regions like the U.S. have been exiting this business model in recent years? Would love to hear your thoughts on that.
Markus Kamieth
Yes, Georgina, thanks for your questions. First of all, I would say that the situation in China certainly has an impact on the overall pricing situation in the world. That is — there’s no question on that because China is by far the largest chemical market in most of the chemical categories that we are looking at here. As you know, we talk always about the overall chemical market, China represents 50%.
And of course, it requires tremendous capacity buildups to continue to support the growth of maybe in the past 5%, 6%, 7% per year in this industry. Now China over the last 3 years has grown lower than expected in GDP, in industrial activity. And that also meant that overcapacity is also in the chemical markets have built up. And these products are looking for a home. And of course, that sets price pressure. There’s export pressure also in all regions impacting pricing.
However, given the size of the Chinese industry, that also can change very quickly because when China’s industrial activity also goes up, domestic manufacturing again strengthens. With currently in 2024 is happening, then this capacity will also be quickly absorbed.
But I would say, overall, you see in especially export markets for China that are easy to reach, Southeast Asia, South Asia, Latin America, where you see particularly strong price pressure coming from the Chinese volume. So I think this is fair.
I cannot talk so specifically to your question on antidumping duty response, it’s a bit hypothetical. I think overall, I have not seen a wave of antidumping tariffs now being applied for, being implemented overall. This is not something that drives our thinking. And that’s certainly also not something we see as a general theme in the industry. There’s always specific cases that you look at where we are also, of course, protecting our interest in the one or the other case. But it’s spotty, it’s not a general broad theme, I think, in the chemical industry.
Your question on the Verbund business model, it’s very difficult to answer, I have to say. Because this word Verbund means a lot and it means a lot of things. And I think our specific setup that we have at our Verbund sites works very well for us. It’s a particular strength for us. And we also build our future view of BASF very much on this strength that we have in the Verbund — at our Verbund sites because it will give us a lot of opportunities, especially in the new regime where the green transformation of the chemical industry will happen over the next 10, 20 years. And this is where Verbund sites, so integrated setups, will play out their particular strength.
So we very much are convinced that for a large part of our portfolio, Verbund or a more specific integrated production setups really make a lot of sense and also in the future will rather gain in competitiveness than the opposite.
So I cannot comment now specifically on why other people chose other different setups, but we feel very comfortable with what we are doing. And as you know, our new site in South China is a very integrated site. And also here, we expect, especially with regards to lowering the carbon footprint, introducing circularity that the Verbund setup will definitely be a strong asset for BASF also in the future.
August 1, 2024
Urethane Highlights from Covestro Investors Call
Covestro AG (CVVTF) Q2 2024 Earnings Call Transcript
Jul. 30, 2024 11:49 AM ETCovestro AG (CVVTF) Stock, COVTY Stock
Covestro AG (OTCPK:CVVTF) Q2 2024 Earnings Conference Call July 30, 2024 10:00 AM ET
Company Participants
Ronald Koehler – Head, Investor Relations
Markus Steilemann – Chief Executive Officer
Christian Baier – Chief Financial Officer
Carsten Intveen – Director, Investor Relations
Markus Steilemann
Thank you, Ronald and hello and a warm welcome to our second quarter call. The highlights of the second quarter were continued strong volume increase of 9.3% year-on-year. With this, we are fully on track to our target of a high single-digit percentage volume increase in the full year 2024.
However, lower prices are still affecting sales, which came in at €3.7 billion. We achieved an EBITDA of €320 million, landing on midpoint of our guidance range. Free operating cash flow was minus €147 million, in line with our expectations. And we are narrowing our EBITDA guidance to €1 billion to €1.4 billion.
Let me take the opportunity and give you a brief update on ADNOC. As we stated on June 24th, we believe that ADNOC and Covestro can generally reach a common understanding regarding core aspects of a possible transaction. Therefore, we have decided to open our books for a confirmatory due diligence and to start concrete negotiations regarding a potential transaction, including the potential conclusion of an investment agreement. This phase is ongoing in a constructive manner.
We pursued the negotiations in accordance with our fiduciary duties in good faith, open-minded and in the interest of our shareholders, our company, our employees, and all other stakeholders. This said, we ask for your understanding that we will not make any further statements at this stage and do not intend to comment further on this issue unless legally required.
Let’s turn pages to Page number 3. Turning back to the business and the volume development in the second quarter of 2024, year-on-year, the global sales volume continued to increase by 9.3%. This is driven by an improving demand, but also by fixing our reliability issues in Europe.
Going through the different industries, construction showed the highest growth rates with a low-teens percentage increase. Furniture and electro follow with a high single-digit increase. Auto exhibited flattish development.
Looking into the different regions, EMLA continued to benefit significantly from the resolved internal availability issues. Drilling it down into the different industries, we see a mixed picture. Construction and furniture are exhibiting strong growth, mostly associated with better availability of our core products, MDI and TDI. Electro and auto, however, are showing a strong decline.
Overall, sales volumes in North America increased slightly, driven by strong growth in furniture and a slight increase in the construction industry. Electro developed rather flattish, while auto shows significant decline.
Asia-Pacific continues with positive growth across all industries that Covestro is focused on. Furniture, auto, and construction exhibited significant growth, while electro showed a slight increase.
With this summary of the demand development, I’m now handing over to Christian, who will guide you through the financials.
Christian Baier
Thank you, Markus, and a warm welcome also from my side. We are on Page 4 of the presentation. Sales for Q2 2024 are stable at €3.7 billion. The strong increase in volume was offset by negative pricing and FX.
Prices declined by 9.7%, counterbalancing the volume increase of 9.3%. The negative FX effect of minus 0.4% was neglectable, and mainly driven by the weaker Chinese renminbi.
With that, let’s turn to the next page where we are showing the Q2 2024 EBITDA, bridge. Year-on-year, we have a decrease in EBITDA of 17% to €320 million. This is at the midpoint of our Q2 guidance range of €270 million to €370 million.
Selling prices declined stronger than raw material costs due to the ongoing unfavorable industry supply-demand ratio. As a consequence, EBITDA was impacted with minus €186 million from a negative pricing delta.
The volume increase only partially compensated the negative pricing delta. And the volume leverage was clearly below the long-term average, due to the historically low margins. FX And other items also contributed to the negative development to a minor extent.
Just to provide full transparency on the EBITDA, bridge. Other items were impacted by €23 million of restructuring costs in the S&S segment as part of the transformation program, STRONG.
Markus Steilemann
Yeah. Thanks, Christian. And let’s turn to page number 10. And also let’s turn now the focus to the future. On June 25th, we launched our new transformation program, STRONG. With STRONG, we are shaping the sustained competitiveness of Covestro with effective structures and efficient processes and supported by a broad AI implementation. After ramp-up phase, beginning 2028, STRONG targets to generate annual savings of €400 million. This is slightly below 10% of our global fixed cost base.
In order to make this happen, we are expecting cumulated €300 million restructuring cost. Our updated 2024 EBITDA guidance assumes a mid-double-digit million euro positive impact from STRONG as savings will be partly counterbalanced by restructuring costs. What are we doing content-wise with STRONG? We have an underlying set of measures that leads to these savings, one-time costs and potential impairments.
For example, we are streamlining our structures and asset footprint, and we are pushing forward our near and offshoring activities. We also skipped already our 2024 non-tariff selling increases. Further content, we will share with you based on the implementation of further steps and after having informed the respective employees.
On the next page, we are now coming to the outlook for Covestro for 2024. We are narrowing our EBITDA guidance for full year 2024. We’re now expecting the EBITDA for full year 2024 to come out between €1 billion and €1.4 billion.
The mark-to-market EBITDA is calculated at around €1.2 billion based on June 2024 margins flat forward and our current budget assumptions for 2024. The updated guidance now assumes only limited changes in our product margins per ton. A more pronounced rebound from the historical low levels is getting rather unlikely in the second half of 2024.
As there has been no significant change in the global demand picture and the industry outlook, we are skipping the comprehensive discussion and the slide here. Let me just highlight the overall trend. The market outlook on global GDP is now around 2.6%, and the outlook for our core industries is mostly unchanged versus the Q1 call.
Sebastian Bray
Hello. Good afternoon, and thank you for taking my questions. I have two, please. The first is related to the operations in Germany, and I think you touched on it already in response to Christian’s question. But has there been — how close to net income breakeven are the operations in Germany currently? And has there been a sequential improvement? Or is it roughly stable between Q1 and Q2?
My second question is on trading by geography. Could you give us a feel for how China is developing and if you expect any bigger recovery moving into 2025? And likewise, any comments on Europe and the US to welcome? Thank you.
Christian Baier
Yes, very happy, Sebastian, to take the first one, and then Markus will go on the second one. With respect to operations in Germany, between the quarters, it’s broadly the same development that we see here. Operationally, we are reasonably close without any special items, if you will, to the zero line, if you take into account the German tax group, it obviously also includes relevant parts of administrative functions, which are then trending in that context. So operationally stable, reasonably close to the zero line from the bottom and then further burden, if you will, from an administrative perspective, which is then driving also the tax losses that we do have sitting in Germany that can be used indefinitely. Markus, please?
Markus Steilemann
Yes. Thanks, Sebastian, also warm welcome from my side. Well, Asia Pacific and that is mainly China continues with positive growth actually across all industries that we are serving, particularly strong has been auto as well as electro. And currently, let’s say, we see this trend ongoing for us also in the third quarter.
For Europe, the picture is different. We have seen also here a good second quarter. But if you now look at the base in Q3 2023, that base was already increasing because we started to fix the reliability issues exactly from the third quarter 2023 onwards, gradually continuing into the fourth then. And that means that also the base for comparison is therefore increasing. That would then lead to lower, let’s say, comparable year-over-year growth rates, which doesn’t indicate a weakness in the market just a different comparison basis, to be clear. And for the US, we see and expect that the third quarter should be relatively stable and steady with regard to the growth rates. Helpful?
Jaideep Pandya
Thanks a lot. The first question is on the different products in the portfolio of Performance Materials. Could you give us some color where are we with regards to margin development for MDI, TDI, PC and polyols? Like what do you see sort of in the market?
And sort of a related question, I think your utilization has now jumped to around mid-80s. So maybe you have another 5%, 7% go, but spreads are really not piping in the market. So I mean when — could you give us a reference point to last time when utilization was 85%, what was the sort of mark-to-market you were looking at back in the day? Because I’m just trying to understand what is the leverage Covestro has internally versus, let’s say, improvement in external factors to get out of this €1.2 billion, €1.3 billion EBITDA ZIP code.
And then, sorry, my last question, and apologies, I’ll stick to the party line, but I just want to understand from the ADNOC situation, is there any sort of scope for the deal to break because, obviously, you have made considerable progress in terms of even reporting or communication, and I understand there is a three-months window. But is there any reason why we should be worried? Or is that completely off the table now and it is really merely a question of price and a timing point of view? Thanks a lot.
Markus Steilemann
Yes, Jaideep, also welcome from my side. So on the different commodities in our portfolio, let’s start with MDI, we perceive the current situation compared to the previous situation that we have talked about to be at a stable margin situation; TDI as well as polyols going slightly down from our expectation and also what we currently see in the first couple of weeks in Q3. And the polycarbonate business is also stable. But more importantly, in this context is getting by the day, basically, the respective downstream business because we’re selling the minority of polycarbonates in the, let’s say, commodity area. This has now only be about one-fifth of the entire polycarbonate we’re selling externally, whereas four-fifth is in the more stable downstream business. And that EP part of our Solutions & Specialties has shown to be, from my perspective at least, very resilient in the overall context. So shall I continue then with the second part or — yes.
Jaideep Pandya
Yes, please.
Markus Steilemann
Okay. So I can also dwell further, let’s say, on MDI. But with regard, let’s talk about Adnoc. So from my perspective, the situation and also the information we can provide has been provided. It has been, from my perspective, as you said, a significant step forward on 24th of June, where we opened the books, where we entered into clear and official negotiations. And I can only reiterate what I have said today numerous times. I think in this phase, the ongoing process is how shall I put it, going well, yes, to be very clear.
And I know that Christian and I have used numerous ways to say today. But from that perspective, I would take it, as we have said it in numerous ways today, not as a, let’s say, indication that something is going right or something is going wrong, but rather as the best thing that we can say in terms of how we currently perceive the situation, yes? Because anything would say in terms of well likelihood has increased, likelihoods decreased, would maybe not express where we currently are. I can only say that everything that I have experienced so far personally is that the phase in which we are currently in is going on constructively. And yes, I could say it in different ways, but that’s really what it is.
You could now start to speculate and say, well, could this be faster? Could that slower? Is there anything that we should worry about? But I think given the very confidential environment in which we have worked so far has served us well, even though I can also fully understand that, at times, you, for sure, have more desire to get even closer to the matter and maybe your desire is there to earlier get more information than we’re currently providing it. But rest assured, we are continuing to negotiating in good faith, open-minded and in full alignment with our fiduciary duties. And secondly, I also would like to reiterate once again that we need to balance, on the one hand, hand, time and, on the other quality of the outcome. And really we balance this each and every day to the best extent possible also in your interest.
July 31, 2024
Domfoam Acquires Foamco
2 foam companies join to expand Canadian footprint
Sheila Long O’Mara //Executive Editor, Furniture Today//July 15, 2024
MONTREAL – Foam maker Domfoam has acquired fellow Canadian foam and mattress maker Foamco Inds. in a move designed to expand its growing market share in the country and enhance its quick delivery service.
Domfoam said the acquisition allows it to expand into the Ontario market and “solidify its presence in Quebec.” The company said it will be able to offer next-day delivery services throughout the greater Toronto area and Ontario.
Financial details of the deal were not disclosed.
“This strategic move allows us to extend our reach and provide superior service to a broader market, meeting the growing demand for our products,” said Jonathan Pomerantz, CEO of Domfoam.
“The acquisition of Foamco is great for Domfoam,” said Karim Khoury, vice president of operations. “It solidifies the fact that we are ready to compete with our biggest competitors and it is very exciting for the Domfoam family to grow.”
Founded in 1963, Domfoam operates three manufacturing facilities in Quebec. Foamco was founded in 1987 as a foam converter and shifted to focus on the bedding industry in the late 1990s. As part of the acquisition, Domfoam adds two factories – one in Toronto and one in Quebec – to its manufacturing network that totals more than 550,000 square feet.
“We are committed to maintaining our high standards of quality and service as we grow, ensuring that our customers in Ontario receive the same level of excellence that has made us a trusted name in Quebec,” Pomerantz said. “This expansion not only enhances our production capacity but also ensures healthy competition for our customers by providing a third manufacturing option. Our increased capabilities will allow us to meet the diverse needs of our consumers more effectively, delivering high-quality foam products with greater efficiency.”
July 25, 2024
Urethane Highlights from Dow’s Investors Call
Dow Inc. (DOW) Q2 2024 Earnings Call Transcript
Jul. 25, 2024 12:05 PM ETDow Inc. (DOW) Stock
Q2: 2024-07-25 Earnings Summary
EPS of $0.68 misses by $0.04 | Revenue of $10.92B (-4.42% Y/Y) misses by $101.82M
Dow Inc. (NYSE:DOW) Q2 2024 Earnings Conference Call July 25, 2024 8:00 AM ET
Company Participants
Andrew Riker – Investor Relations, Vice President
Jim Fitterling – Chair and Chief Executive Officer
Jeff Tate – Chief Financial Officer
Jim Fitterling
Thank you, Andrew. Beginning on slide three, in the second quarter, team Dow delivered sequential top and bottom line growth, as well as the third consecutive quarter of year-over-year volume growth. We achieved this despite a slower-than-expected global macroeconomic recovery, particularly in areas like building and construction and consumer durables.
Net sales were $10.9 billion, down 4% versus the year ago period and up 1% sequentially, driven by gains in packaging and specialty plastics and performance materials and coatings. Volume increased 1% versus the year ago period with gains led by the United States and Canada. Excluding hydrocarbons and energy sales, which were down primarily due to lighter feed slate cracking in Europe, volume increased 4%.
Sequentially, volume increased 1% with gains in all regions except Asia Pacific, which was flat. Local price decreased 4% year-over-year. Sequentially, local price increased 1% led by gains in Europe, the Middle East, Africa, and India or EMEA. Operating EBIT was $819 million, up $145 million sequentially, reflecting gains in packaging and specialty plastics and performance materials and coatings.
Cash flow from operations was $832 million on higher earnings and an efficient release of working capital, resulting in an 85% cash flow conversion on a trailing 12-month basis. Our focus on cash flow generation enabled $691 million in returns to shareholders, including $491 million through dividends and $200 million in share repurchases.
In June, we published our 2023 Intersections Progress Report. This report showcases the positive impact that we are making on the environment and society and importantly, how those actions support long-term profitable growth.
Now turning to our operating segment performance on slide four. In the packaging and specialty plastic segment, operating EBIT was $703 million, down $215 million a year-over-year, this was driven by lower integrated margins, higher planned maintenance activity, and lower non-recurring licensing sales. Local peak declines were due to lower downstream polymer prices, primarily in Asia Pacific. Volume decreased year-over-year as higher demand for functional polymers and polyethylene was more than offset by lower merchant hydrocarbon sales, primarily due to lighter feed slate cracking in Europe. Sequentially, operating EBIT increased by $98 million, primarily due to higher integrated margins behind both price and volume gain.
Moving to the Industrial Intermediates & Infrastructure segment, operating EBIT was $7 million, an improvement of $42 million versus the year-ago period. Results were driven by improved equity earnings, partly offset by lower integrated margins. Local price declined year-over-year, but volume was up, driven by gains in polyurethane and construction chemicals.
Sequentially operating EBIT decreased $80 million, driven by higher planned maintenance activity and higher equity losses, as well as lower volumes. And in the performance materials and coating segment, operating EBIT was $146 million, up $80 million, compared to the year-ago period, driven by broad-based business and geographic volume growth.
Local price declined year-over-year, but volume was up, driven by gains in both businesses and all geographic regions. Sequentially operating EBIT increased to $105 million, driven by volume and price gains in both businesses and lower planned maintenance activity.
Now I’ll turn it over to Jeff to review our outlook and share some examples of our playbook in action.
Jeff Tate
Thank you, Jim. And good morning to everyone joining our call today. Moving to slide five, in the near-term, we expect macro-dynamics to remain largely unchanged. While global manufacturing PMI has been positive since February 2024, the pace of the global economic recovery has decelerated slightly. This is primarily led by China, where economic growth in the second quarter was lower than the market expected. Overall, we continue to keep a close eye on the weight of inflation on U.S. consumer, global interest rates, and geopolitical tensions.
Looking across our four market verticals, packaging demand is seeing global growth, primarily in the U.S. and Canada as the industry experiences robust domestic and export demand for polyethylene. In Europe, soft demand across the value chain is reflected in manufacturing PMI levels, which despite stabilizing, remain in contractionary territory. And in Asia, packaging demand has remained steady, but the reason has been impacted by poor congestion and rising transportation costs.
Infrastructure demand, primarily residential construction, continues to be soft across most regions. In June, existing U.S. home sales, which tend to drive residential paint sales for both buyers and sellers, were below prior year levels. And building permits were down slightly year-to-date through June. Eurozone construction PMI remains in contractionary territory and declined to 41.8 last month, down from 42.9 in May. And in China, new home prices were down 4.5% year-over-year in June.
Consumer spending has shown resilience in most regions except Europe where consumer confidence remained negative in July. In the U.S., retail sales are up 2.3% year-to-date through June, but furniture and bedding sales remain low. In China, retail sales increased by 2% year-over-year in June, but marked the first month of deceleration since July 2023. And in mobility, China auto production was down 2.1% year-over-year in June amidst the potential for tariff increases and flow to materialized incentives.
In the U.S., auto sales were down year-over-year in June after increasing by more than 2% in May. Against this backdrop, we delivered the third consecutive quarter of year-over-year volume growth and will continue to leverage our differentiated portfolio to capitalize on areas of demand strength, while maintaining operating and financial discipline. And I’ll touch on these actions in more detail shortly.
Now turning to our outlook on slide six. We expect third quarter earnings to be slightly above second quarter performance, continuing our string of sequential improvement. We experience minimal disruption from Hurricane Berly in the U.S. Gulf Coast, and we expect the positive sequential signals in some markets will continue. In the packaging, especially plastic segment, we expect modest top line sequential growth. Domestic and export demand for polyethylene in North America will remain robust, and EMEA will experience typical lower demand seasonality from the summer holidays.
In addition, the completion of our cracker turnaround into being Texas in the second quarter will be offset by another planned turnaround at our St. Charles, Louisiana cracker in the third quarter. In the industrial, intermediates and infrastructure segment, market conditions remain mixed. Demand in energy and pharma end markets remains resilient, but consumer durable demand has not shown any significant signs of inflection.
We expect an approximately $25 million headwind due to the planned maintenance activity in the U.S. Gulf Coast. Importantly, at the end of June, we successfully started up our glycol 2 facility at Louisiana operations, which will ramp through the quarter and provide a sequential tailwind of $75 million.
In the performance materials and coating segment, we continue to see growth in downstream silicone applications across most end markets, but the siloxane prices are still under pressure. Lower seasonal demand for building and construction end markets are expected to be a headwind of approximately $50 million, while lower planned maintenance activity will contribute a $25 million tailwind.
Moving to slide seven. As we navigate the current market conditions, we are focused on executing our proven playbook to deliver increased value over the cycle. We benefit from our global asset footprint with leading positions in every region. This is particularly true in the cost-advantaged America, where approximately 65% of our global production capacity is located, and we expect to reach 70% by 2030.
With leading low-cost feedstock positions, trust our industry-leading feedstock flexibility, Dow is well positioned to capture growing global demand for our products. And supported by our solid financial position, we remain on track to deliver our countercyclical growth investments. Team Dow continues to operate with discipline as we maintain our low cost to serve mindset, focus on maximizing cash flow, and further strengthen our financial positions.
im Fitterling
Thank you, Jeff. Moving to slide eight, our expectations for 2024 reflect a slower pace of recovery in certain end markets. Dow is positioned to capture more than $3 billion in EBITDA upside as we return to mid-cycle earnings levels. We are encouraged by the positive top line signals across our portfolio. This is demonstrated by our year-over-year volume improvement in the last three quarters, as well as price stabilization across the entire enterprise over that same period.
In packaging especially plastics, we anticipate supply demand fundamentals to continue improving as the recent polyethylene capacity builds in North America have been fully absorbed by growing global demand. We’re also starting to see rationalization of higher cost assets, particularly in Europe. And going forward, we did not expect to see any new capacity in the cost-advantaged Americas until the 2026, 2027 timeframe.
In industrial intermediates & infrastructure, we’ve maintained a disciplined approach to our inventory management. The beginning of an interest rate cutting cycle will accelerate demand in our polyurethan’s business. In industrial solutions, the majority of our U.S. Gulf Coast capacity is aligned to higher value EO derivatives. With the successful restart of our Glycol-2 facility in Louisiana, we will see positive impact in consumer, mobility, pharma, and energy and markets. And in performance materials and coatings, industry siloxane capacity additions are expected to slow due to prolonged negative cash margins impacting non-integrated players.
And lastly, our coatings business is highly correlated to existing home sales with market demand forecasted to see pre-pandemic levels by next year. With these positive indicators combined with an economic recovery, Dow is positioned to capture significant annual earnings upside at mid-cycle levels.
Vincent Andrews
Thank you and good morning everyone. Jim, we’d love to get your sort of high level thoughts on two things that might have opposite reactions. One, it does seem like we’re finally going to get into a period where interest rates are going to come down, which I would expect to be broadly positive for your business, particularly your exposure to building and construction. But politically, we may be also re-entering a period geopolitically with tariffs and duties and things like that. So I’m wondering if you can compare and contrast, you know, sort of what the impact of both of those dynamics could be for Dow as we look into 2025?
Jim Fitterling
Good morning, Vince, I’m happy to do that. On interest rates, we had expected that by this time, we’d probably have seen two or three interest rate cuts in the year, we haven’t seen the first one yet. I do think the expectation is coming. If you look at the housing market, I think you’re seeing the weight right now of the high interest rates on housing [Technical Difficulty] new builds [Technical Difficulty] you know and employees that are kind of stacking up on [Technical Difficulty]. And part of it’s because people are unable to qualify for mortgages at these higher rates.
So I think when we start to see mortgage rates get something with a five-hand on them, we’re going to see a couple of things happen. We’re going to see people, who have financed mortgages at these higher rates of 7%-plus will get some advantage to do a refinance. We’re going to see people who’ve been sitting on the sidelines with properties they want to sell, move into start to sell them, because people can get qualified for the mortgages. And you’ve got to start to see building credits increase.
In polyurethanes and construction chemicals, when that starts to happen, you get a domino effect that happens. You get both existing ones there and you build starting to build them. That drives volume, and then, of course, anytime you have that, you’ve got appliances, [Technical Difficulty], all the other things that go on with it. And so that tends to wrap it up pretty quickly. We haven’t seen that yet. Obviously teams were managing it closely, but we haven’t seen that tick up.
On the geopolitics side, yes, I think on — you do on both sides, on the political spectrum, you’re expecting a more percussive tone that we’re hearing coming out from both sides. I would say that the big driver behind that is in many cases where a lot of capacity has been built in China, there’s enough data to suggest that they’re being subsidized and those products are being flooded into other markets. And it’s hard to see anti-dumping cases being brought against China around the world in different areas. And so I think you are going to see activities that are going to try to halt some of that from happening in concert with trying to bring the manufacturing back.
Today, most of the manufacturing is going to go into Mexico, if you think about it, from our perspective. We haven’t had time to see the impact from semiconductors and other things being invested. That will take a few years to get to market. But I think we’re going to see increased rates on a whole host of things. Most of them are in the 25% to 50% range. And most of that is what people believe is the amount of subsidies going on to those markets. So we’re prepared for whatever case we get, depending on the outcome of the election. And as always, we just have to get on there and make sure that either side understands the supply chains, how product flows, and what’s important to keep industry moving, not just here, but in Europe and around the world.
Laurence Alexander
Good morning. I just wanted to follow-up on your discussion around potential tariff structures and how they might evolve, how do you think the response function in the industry with your customers has shifted that is if there is movement towards new tariffs, how significant a restock cycle do you see that triggering in advance?
Jim Fitterling
I don’t think anything has started yet, Laurence, on people doing stocking in advance of tariffs. And I think primarily because there’s all the uncertainty around the election and what policies are going to actually stick. I think on the same — by the same token, I think there’s a little bit of view that China doesn’t know what it’s going to do yet from an incentive standpoint for its own economy until it gets a better feel for what’s going to happen with the U.S. presidential election. We’re doing scenario planning here to look at the impact.
As I mentioned, there are antidumping activities going on in different parts of the world because of challenges that we see from things being — volumes being dropped into markets. And so there’s a lot of work going on behind the scenes. I think that will — we’ll get a clearer picture for that by the end of the year. But right now, I would say I haven’t seen any uptick in volumes or stocking because of that.
Mike Leithead
Great, thanks. Good morning. Jim, just a bigger picture question. DOW is obviously investing a lot for medium-term growth. You’ve laid out a lot of 2025 and 2030 expansion targets. But at the same time, the overall demand backdrop since about mid-’22 has probably been materially worse than you or anybody has thought at that time. So as that timing gap between near-term weakness, medium-term growth sort of closes, I mean, 2025 is only five months away now. Does that give you any pause at all in some of your investments? Do you need to rethink or pivot any of these expansions and sort of lower for longer economic scenario?
Jim Fitterling
It’s a good question, Mike. But I would also ask you to think about it and even a longer-term time frame, it takes years to plan and make these investments. And we have to look at what’s happened in plastics take for an example. Since 2019, we’ve seen a 20% increase in volumes in plastics, you can’t obviously respond to the market when you see the increase and start to get this capacity in place. You’ve got to get in place to take advantage of the mid-cycle and the up cycle ahead of time.
So typically, when we’re at this point in the cycle, it’s a common question that everybody asks, but we’ve got to look through at the long-term trends and the long-term trends for plastics say the growth is going to continue to be there. We’ve tried to move into the areas where there is differentiation and there’s higher growth rates. Whether that’s silicones, whether that’s plastics, whether that’s industrial solutions on the higher value of specialty EO derivatives where we’re investing. That’s where the dollars are going. So those three markets are consuming most of your capacity expansion.
What we’ve been doing in polyurethanes is more rationalizing the footprint around the higher-value markets, more downstream less commodity-like PO more MDI containing components. And on coatings, obviously, being able to move with the market as the housing market improves. So I feel good about the long-term direction. We’re not back at mid-cycle yet. As we get back to mid-cycle, there’s a $3 billion step-up in earnings at mid-cycle margins. And then once path to zero comes on in the ’27, ’29 time frame, and you get to peak, there’s another $3 billion step-up to peak.
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