Dow Announces Second Quarter 2021 Financial Results

The Dow Company released its second quarter 2021 financial report on July 24, a summary of which is as follows:

Summary

Earnings per share on a GAAP basis were $2.
51; operating earnings per share were $2.
72, compared with a loss of $0.
26 a year ago and a profit of $1.
36 per share in the first quarter of this year
.
Operating EPS excludes costs of $0.
21 per share for significant items in the quarter, primarily related to early-stage debt settlement and digitization projects
.

Net sales of $13.
9 billion increased 66% year over year and 17% sequentially, with growth across all operating segments, business segments and regions
.

Local prices rose 53% year-on-year and 16% month-on-month, with increases across all operating segments, business segments and regions, mainly due to tight supply and demand in key value chains
.

Volumes were up 9% year-over-year, with growth across all operating segments, with the largest increase in polyurethane and silicone applications as demand picked up after the COVID-19 pandemic
.
The sequential increase was 1% as demand recovery in infrastructure, industrial and personal care end markets was limited by supply shortages, partially offset by continued supply constraints due to the impact of Winter Storm Uri on the U.
S.
Gulf Coast
.

Equity income was $278 million, up $373 million year-over-year, primarily due to higher margins in polyurethane and polyethylene at Sadara and the Kuwait joint venture
.
Equity earnings increased by $54 million sequentially, primarily from Dow's joint venture in Thailand
.

GAAP net income was $1.
9 billion
.
Operating earnings before interest and taxes (EBIT) increased by $2.
8 billion year over year, with growth across all operating segments and business segments
.
The increase reflects improved margins and equity earnings due to tight supply and demand across key value chains
.
EBIT increased by $1.
3 billion sequentially, with growth in all operating segments and business segments
.

Cash from operating activities (ie, continuing operations) was $2.
0 billion, an increase of $422 million year-over-year and a sequential increase of $2.
2 billion
.
Cash flow was $1.
7 billion
.

Dow's total debt decreased by $1.
1 billion in the quarter
.
The company has taken active debt management initiatives, redeeming existing bonds due in 2024, thereby eliminating material long-term debt by the end of 2025, and reducing interest expense by $35 million per year
.

Total return to shareholders for the quarter was $722 million, including a dividend return of $522 million and share repurchases of $200 million
.

CEO Commentary

Jim Fitterling, chairman and CEO of Dow, had this to say about the quarter's results:

"Second quarter results demonstrated strong demand across all our value chains and all regions, with significant year-over-year and quarter-over-quarter growth in both our sales and profits
.
The Dow team continued to maintain strong execution and cost control to ensure continued margin growth
.
We have reduced total debt by more than $1 billion through prudent capital allocation; advanced incremental investments in high-growth areas; returned cash to shareholders with industry-leading dividend levels; and Reinstated our share repurchase program
.
At the same time, we published our comprehensive ESG report 'INtersections', increasing our transparency on our priorities and performance across environmental, social and corporate governance
.
"

Outlook

"Our first-half results reflect the agility of the Dow team, and our ability to respond flexibly to growing customer demand despite industry-wide supply disruptions across many value chains," Fitterling said
.
With further improvements in consumer spending, international travel and industrial production, we will maintain our earnings momentum
.
As the global economy recovers more broadly, through our differentiated materials science solutions and our participation in fast-growing end markets, Dow is well positioned to seize the opportunity to create value
.
At our upcoming Investor Day on October 6, 2021, we will share more about Dow's strategic and financial priorities to continue serving all of our stakeholders create long-term value
.
”