Dow (DOW 4.09%), a leading materials science company, released its earnings for the fourth quarter of 2024 on Jan. 30. The results highlighted a challenging quarter, with adjusted earnings per share (EPS) coming in at $0, missing analysts' estimates of $0.24. Total revenue was $10.4 billion, below the expected $10.51 billion. These figures reflect a difficult macroeconomic environment, with pressures on profitability and demand.
| Metric | Q4 2024 | Q4 2024 Analysts' Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| Adjusted EPS | $0.00 | $0.24 | $0.43 | (100%) |
| Revenue | $10.4 billion | $10.51 billion | $10.62 billion | (2.1%) |
| Operating EBIT | $454 million | N/A | $559 million | (18.8%) |
| Cash from operations | $811 million | N/A | $1.63 billion | (50.2%) |
Source: Analysts' estimates for the quarter provided by FactSet.
Overview of Dow's Business
Dow is a prominent materials science company, managing extensive operations worldwide. It offers diversified products across segments such as packaging & specialty plastics, industrial intermediates & infrastructure, and performance materials & coatings. This broad portfolio mitigates market risks through diversification and integrated consumer-centric strategies.
In recent years, Dow has concentrated on sustainability and innovation, aiming to lead in environmentally responsible manufacturing. Its efforts have included ambitious projects like its net-zero emissions ethylene complex. Additionally, Dow leverages global scale and strategic partnerships to enhance efficiency and tap into expanding markets.
NYSE: DOW
Key Data Points
Q4's Highlights and Challenges
During the fourth quarter, Dow faced some segment-specific challenges. Packaging & specialty plastics -- which accounts for just over half of Dow's total revenue and the lion's share of its operating EBIT -- experienced a 6% year-over-year decrease in net sales, impacted by lower pricing in Asia Pacific. The segment's operating EBIT also decreased by $217 million due to reduced margins and licensing revenues. In industrial intermediates & infrastructure, net sales were stable, with EBIT improving by $69 million, aided by enhanced operating rates.
Performance materials & coatings saw a 4% increase in net sales year over year despite an 11% sequential decline. Year-over-year operating EBIT improved by $52 million due to volume gains, offset by seasonal demand reductions. The company continued to prioritize sustainability initiatives, including strategic recycling partnerships.
The macroeconomic climate remained challenging, particularly in Europe and China, impacting demand and pricing across Dow's segments. Unplanned operational disruptions, such as the Texas cracker outage, prompted adjustments to maintain supply chain efficiency.
In terms of dividends, no changes were highlighted for this quarter: The payout remained at $0.70 per share.
Looking Ahead
Dow's management did not offer specific guidance on revenue or earnings. It did, however, emphasize strategic initiatives targeting high-growth markets such as electronics and packaging. CEO Jim Fitterling anticipates positive effects from ongoing projects, which align with Dow's focus on operational discipline and financial flexibility. The company is reducing its capital expenditure plans for 2025 by $300 million to $500 million, and is pursuing operational efficiency improvements aimed at reducing its annual costs by $1 billion.
Investors should keep an eye on any significant strategic shifts, particularly regarding Dow's European assets. The company's focus will remain on enhancing its competitive position through innovation and operational efficiency in the face of global economic pressures and evolving market demands.
