Urethane Blog

Dow Chemical Q2 Results

July 21, 2022

Dow reports second quarter 2022 results

• GAAP earnings per share (EPS) was $2.26; Operating EPS1 was $2.31, compared to $2.72 in the year-ago
period and $2.34 in the prior quarter. Operating EPS excludes significant items in the quarter, totaling $0.05 per
share, primarily related to digitalization program costs.

• Net sales were $15.7 billion, up 13% versus the year-ago period with gains in all operating segments and
regions. Sequentially, sales were up 3% with gains in all regions except Asia Pacific, which was impacted by
pandemic-related lockdowns in China.

• Local price increased 16% versus the year-ago period, reflecting gains in all operating segments, businesses,
and regions. Currency decreased net sales by 3% year-over-year due to broad-based strength of the U.S.
dollar. Sequentially, local price increased 6% with gains in all operating segments and regions.

• Volume was consistent with the year-ago period, as gains in Packaging & Specialty Plastics were primarily
offset by declines in Industrial Intermediates & Infrastructure. Sequentially, volume declined 2%, driven by
declines primarily in Europe and China.

• Equity earnings were $195 million, down $83 million from the year-ago period, primarily due to impacts from
pandemic-related lockdowns in China. Equity earnings were up $21 million from the prior quarter, driven by
gains at Sadara.

• GAAP Net Income was $1.7 billion. Operating EBIT1 was $2.4 billion, down $453 million versus the year-ago
period. Gains in the Performance Materials & Coatings segment were more than offset by higher raw material
and energy costs across the company as well as lower equity earnings. Sequentially, operating EBIT decreased
2%, as gains in Packaging & Specialty Plastics were more than offset by declines in Industrial Intermediates &

• Cash provided by operating activities – continuing operations was $1.9 billion, down $165 million year-overyear
and up $244 million compared to the prior quarter. Free cash flow1 was $1.4 billion.

• The Company’s proactive actions to redeem outstanding notes totaling $750 million have delivered an annual
interest expense reduction of $27 million and no substantive long-term debt maturities are due until 2027.

• Returns to shareholders totaled $1.3 billion in the quarter, comprised of $800 million in share repurchases and
$505 million in dividends.


Jim Fitterling, chairman and chief executive officer, commented on the quarter:

“Team Dow once again delivered net sales growth both year-over-year and sequentially with price increases across
all operating segments and regions. Our competitive advantages and relentless focus on disciplined execution
enabled us to navigate the impacts of pandemic-related lockdowns in China, continued logistics constraints, and
higher energy and raw material costs. As a result, we increased our cash flow and our share buybacks sequentially.

“We continued to progress our strategy to grow our underlying earnings over the economic cycle by investing in
higher-return, faster-payback projects while capitalizing on long-term growth opportunities. As part of these efforts,
today we announced a series of circularity projects that will enable us to achieve approximately two thirds of our
2030 ‘Stop the Waste’ target as we capture growth for the sustainable and circular solutions our customers are
increasingly demanding.”

Polyurethanes & Construction Chemicals business net sales decreased compared to the year-ago period, as local
price gains were more than offset by local currency and lower volume due to planned maintenance turnaround
activity, third-party outages, and inflationary impacts on demand for consumer durables. Sequentially, net sales
declined as lower volumes from planned maintenance turnaround activity and third-party outages were partly offset
by higher local price.


“Looking ahead, the long-term fundamentals driving growth across our end markets remain attractive,” said
Fitterling. “While near-term market conditions are dynamic, we will continue to leverage our diverse, global portfolio
and flexible operating model to capitalize on attractive growth opportunities. The actions we’ve taken to enhance
the resiliency of our business position us well to deliver value across a variety of economic environments. Our
disciplined and balanced approach to capital allocation has delivered higher mid-cycle earnings, an improved credit
profile, and cash generation above pre-pandemic levels. Team Dow remains well-positioned to continue advancing
our “decarbonize and grow” strategy while delivering attractive shareholder remuneration.”