The Urethane Blog

Dow Q4 Results

Dow reports fourth quarter 2020 results; Double Digit Sales Growth in Polyurethanes

Thu January 28, 2021 6:00 AM|Business Wire|About: DOW



  • GAAP earnings per share was $1.65; Operating EPS¹ was $0.81, excluding significant items in the quarter totaling $0.84 per share, primarily related to a gain on the sale of certain U.S. Gulf Coast marine and terminal operations and assets, as well as a gain associated with a legal matter.
  • Net sales were $10.7 billion, up 5% versus the year-ago period, with increased local prices, currency and volume. Dow’s fourth quarter sales increased 10% versus the prior quarter as the global economic recovery continued.
  • Local price increased 2% versus the year-ago period, primarily driven by improved pricing in polyethylene and polyurethane applications. Currency increased sales by 2%. Sequentially, price increased 8% with improvements in all segments.
  • Volume increased 1% versus the year-ago period, reaching pre-pandemic volume levels in all operating segments. The year-over-year increase was led by demand growth in Packaging & Specialty Plastics and Performance Materials & Coatings. Compared to the prior quarter, volume increased 2% with gains in Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and in all regions, driven by strong supply and demand fundamentals.
  • Equity earnings were $106 million, up $127 million compared to the year-ago period, primarily driven by continued improvement in financial results at the Sadara joint venture.
  • GAAP Net Income was $1.3 billion. Operating EBIT1 was $1.1 billion, up from $1.0 billion in the year-ago period due to margin expansion in polyethylene and polyurethane applications.
  • Cash provided by operating activities – continuing ops. was $1.7 billion and free cash flow1 was $1.4 billion. Working capital was a $236 million source of cash despite increased sales. Free cash flow for the year was $5 billion, up $1.2 billion over the prior year. Cash conversion1 in the quarter was 93%, leading to a full-year rate of 112%, a 30% improvement over the prior year.
  • Dividend returns to shareholders totaled $519 million in the quarter.
  • Total cash and available committed liquidity at quarter-end was $14.6 billion, an increase of $3.9 billion over the year-ago period.
  • Net debt1 was reduced by $837 million in the quarter, resulting in a total net debt improvement of more than $2.6 billion in 2020. The Company continues to have no substantive long-term debt maturities due until the second half of 2024.
  • Dow completed the sale of select U.S. Gulf Coast marine and terminal operations and assets, receiving cash proceeds of $620 million in the quarter.
  • Sadara reached agreement in principle on key terms for its debt reprofiling with all remaining lenders in January 2021, supporting the joint venture’s path toward cash flow self-sufficiency.


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

“The Dow team delivered top- and bottom-line growth in the fourth quarter, reaching pre-pandemic levels across most businesses as the economic recovery continued to gain traction. Our consumer-led portfolio and ongoing focus on capturing demand drove year-over-year volume growth in every region and segment, as well as sequential price and margin expansion across the portfolio.

“We delivered free cash flow of $5 billion for the year, and further improved our cash conversion rate by 30 percent. This focus on cash flow generation, coupled with our execution of key strategic cash levers such as the sale of select U.S. Gulf Coast marine and terminal assets, enabled additional deleveraging in the quarter as we reduced total net debt by more than $2.6 billion for the year. And we also achieved a significant milestone for Sadara by reaching agreement in principle with the lenders on its debt reprofiling. This was a strong finish to a year where the Dow team capably overcame significant macroeconomic and other external challenges. I am confident about our path forward for 2021 and beyond.”

Industrial Intermediates & Infrastructure net sales were $3.5 billion, up 8% versus the year-ago period. Local price improved 6%, primarily driven by significant increases in consumer goods and appliances. Currency increased net sales by 2%. Volume was resilient with growth from strong construction and durable goods demand, offset by downward pressure from supply limitations. On a sequential basis, the segment recorded a net sales increase of 14%, driven by significant price improvement in polyurethanes and robust demand in Industrial Solutions in line with the macroeconomic recovery.

Equity earnings for the segment were $36 million, an increase of $81 million compared to equity losses of $45 million in the year-ago period, driven by margin expansion at Sadara.

Operating EBIT was $296 million, compared to $221 million in the year-ago period due to strong supply and demand fundamentals in Polyurethanes & Construction Chemicals and at Sadara. Sequentially, the segment increased Op. EBIT by $192 million driven by significant improvement in margin-over-raw material costs across both businesses.

Polyurethanes & Construction Chemicals reported a double-digit net sales increase compared to the year-ago period, primarily due to significantly higher local prices in polyurethane applications, with improvements in all regions except Latin America. Demand recovery in Europe, Middle East, Africa and India (EMEAI) and Latin America, particularly in construction and consumer durables, was more than offset by lower supply volumes from planned and unplanned maintenance, weak demand for aircraft de-icing fluids, and reduced participation in select markets. And sequentially, the business delivered double-digit sales growth, driven by strong local pricing in all regions, as well as in furniture & bedding and appliance end markets.