The Urethane Blog

Dow Q2 Struggles

Dow CFO sees additional $350M headwind to Q2 EBITDA

Jun. 24, 2020 6:57 PM ET|About: Dow Inc. (DOW)|By: Carl Surran, SA News Editor

Dow Inc. (DOW -7%) was today’s biggest loser on the Dow Jones index after President and CFO Howard Ungerleider said he expects “an additional $350M headwind” to total EBITDA in Q2 compared with current market expectations, primarily due to a delayed and slower recovery in the automotive, construction, appliance and furniture sectors.

In remarks today at the BMO Chemicals & Packaging Conference, Ungerleider said Dow saw gradual incremental gains in May from April to May with expectations for further revenue improvement in June, but the composition of sales by segment is a bit different than expected, driven by lower spending in consumer durables and big-ticket items.

The “sluggish Q2 recovery in durable consumer items has significantly impacted our Industrial Intermediates and Infrastructure operating segment… with polyurethanes having the greatest exposure to these end-markets. Going into Q2, we expected demand declines in our polyurethanes applications in the 15%-20% range.. but now believe it will be closer to the 25%-30% range,” the CFO said.

On a more upbeat note, Ungerleider found it “encouraging to see the pace of recovery beginning to accelerate in June in almost every value chain in our portfolio… Our order books and shipments for this month show that volume expectations continue to improve across all of our businesses.”