Dow Chemical Reports 7.8 Billion Yuan Loss!

On July 24, Dow Chemical released its Q2 performance data: all departments saw declines, and losses widened! Following BASF, the world’s largest chemical company, which announced an 81% drop in Q2 net profit, another global giant (ranked third worldwide) shows signs of market chill and helplessness.

Overall Data

1. Net Sales: $10.1 billion, down 7% year-over-year, with declines across all operational segments. Down 3% quarter-over-quarter (Q1 2025 was $10.4 billion).
2. Volume: Down 1% year-over-year, down 2% quarter-over-quarter. Though sales rose in the US and Canada, decreases in Europe, Middle East, Africa, and India offset gains.
3. Price: Down 7% year-over-year, down 3% quarter-over-quarter, mainly due to global chemical product price pressures.
4. GAAP Net Profit: Loss of $801 million. In Q1 2025, the loss was $290 million, so the total loss for the first half of the year reached $1.091 billion (~7.8 billion RMB).
5. Operating EBIT: Loss of $21 million, down $840 million year-over-year, primarily impacted by price declines and reduced equity income. Down $251 million quarter-over-quarter; currency benefits and cost-cutting were offset by declines in packaging and specialty plastics segments.
6. Cash Flow from Operating Activities: Negative $470 million, down $1.3 billion year-over-year, down $574 million quarter-over-quarter, mainly due to margin compression.

According to London Stock Exchange data, analysts had expected a quarterly loss of only 17 cents per share. EBITDA dropped sharply from $1.5 billion last year to $703 million. Revenue decreased 7% to $10.1 billion.

The group is suffering from ongoing industry slowdown. Global chemical companies face pressure to rethink strategies amid rising European production costs, weak demand, and stringent environmental regulations.

To address these challenges, Dow announced closures of three energy-intensive plants in Europe, including the B?hlen and Schkopau plants in Germany, leading to about 800 layoffs. The company also announced in January a $1 billion cost-cutting plan with 1,500 global layoffs.

However, Dow recently won a lawsuit against Nova Chemicals and will receive an additional 1.62 billion CAD (~8.5274 billion RMB) in compensation expected in Q4 2025, which will significantly improve its financial results this year.

By Segment

Packaging and Specialty Plastics Segment

1. Net Sales: $5.0 billion, down 9% year-over-year, mainly due to polymer price declines and reduced ethylene sales because of the Poly-7 startup, which balances ethylene supply and demand in the US Gulf Coast.
2. Operating EBIT: $71 million, down 89% year-over-year, down $271 million quarter-over-quarter.

Within the two main sub-segments, packaging and specialty plastics sales declined due to lower downstream polymer prices, divestment of lamination adhesives, and weaker infrastructure demand. Hydrocarbons and energy sales declined due to falling aromatics prices, partially offset by energy sales growth.

Industrial Intermediates and Infrastructure Segment

1. Net Sales: $2.8 billion, down 6% year-over-year, down 2% quarter-over-quarter, mainly from declines in both price and volume.
2. Volume: Down 2% year-over-year, affected by lower polyurethane and construction chemicals sales, partly offset by growth in industrial solutions volume.
3. Operating EBIT: Loss of $185 million (year-over-year turned negative).

Performance Materials and Coatings Segment

1. Net Sales: $2.1 billion, down 5% year-over-year, up 3% quarter-over-quarter, driven by seasonal increases in architectural coatings demand and growth in downstream silicone sales; both businesses grew.
2. Volume: Down 3% year-over-year.
3. Operating EBIT: Increased $6 million year-over-year, up $103 million quarter-over-quarter.

In the two sub-segments: consumer solutions sales declined year-over-year as growth in downstream silicones was offset by price declines and upstream siloxane volume declines. Quarter-over-quarter growth was driven by increased demand for downstream silicones, mainly from transportation, personal care, and industrial applications. Coatings and performance monomers sales declined year-over-year due to sustained pressure on the real estate market and reduced coatings demand, but quarterly growth was driven by seasonal architectural coatings demand, partly offset by declining acrylic monomer volume.

Outlook

Dow Chemical stated that recent growth projects commissioning (all starting in Q3), together with long-term strategic investments, will enhance Dow's position in higher-value applications and attractive end markets. Structural cost base improvements, global asset optimization, and an excellent operational record will strengthen competitive advantages.

Regarding asset optimization, Dow recently announced the shutdown of three upstream European assets, including the ethylene cracker at B?hlen, Germany, the chlor-alkali and vinyl (CAV) assets in Schkopau, Germany, and the basic siloxane plant in Barry, UK. In June, it also announced the sale of its 50% stake in the joint venture DowAksa (a global leading industrial carbon fiber manufacturer) to partner Turkish Aksa.

This move continues over 20 "asset actions" launched since 2023, after Dow previously closed its polyether polyol plant in San Lorenzo, Argentina, alkoxylation plant in Nangang Industrial Park, Taiwan, and divested non-core businesses such as the flexible packaging adhesives segment.