Dow posts record year in 2021

Dow Inc. closed 2021 on a high note, posting financial gains for the fourth quarter and for the full year.

"The fourth quarter capped a record year for Dow," Chief Financial Officer Howard Ungerleider said in a Jan. 27 interview with Plastics News. "Our performance capitalized on strong underlying demand and operating discipline. That allowed us to overcome higher material and energy costs."

Fourth-quarter sales at Midland, Mich.-based Dow were almost $14.4 billion, up more than 25 percent vs. the same quarter in 2020. Quarterly sales in the firm's Packaging & Specialty Plastics unit — including polyethylene resin —grew more than 40 percent to almost $7.2 billion. Officials said that unit's growth was achieved even as sales volume in pounds was down for the quarter, due in part to supply constraints in the Asia Pacific region.

Sales for the quarter in its Industrial Intermediates & Infrastructure unit, including polyurethanes, jumped almost 30 percent to more than $4.5 billion.

For the fourth quarter, pretax operating profit in Dow's packaging unit was up almost 85 percent to more than $1.4 billion. In its industrial unit, pretax operating profit more than doubled to $595 million.

Dow's total annual profit for 2021 surged to $6.4 billion — almost five times its 2020 level — as total sales climbed almost 43 percent to almost $55 billion. As with other plastics and chemical firms, Dow recovered from challenging market conditions caused in 2021 by the ongoing global COVID-19 pandemic.

Dow's packaging unit sales boomed almost 56 percent to $28.1 billion in full-year 2021, with industrial sales up more than 40 percent to $16.9 billion. Packaging was the largest of Dow's three operating units in 2021, bringing in more than 51 percent of total sales.

"Packaging continues to grow," Ungerleider said. "There's not much inventory in the chain and there are ongoing maintenance and logistics issues. And oil prices are up, which is putting pressure on the polyethylene cost structure."

He added that PE "is a large market that's still growing and is going to need more capacity."

Rising inflation "could be a headwind in the short-term, but in the mid-term, it's typically good for our sector," Ungerleider said.

Sustainability "is more of an opportunity than a threat for us," he said. "Polyethylene has the lowest carbon footprint of any major resin, even if others have higher recycling rates."

In October, Dow announced ambitious environmental goals, including plans to build the world's first net-zero carbon emissions ethylene cracker in Canada. The firm will convert assets in Fort Saskatchewan, Alberta, to create a net-zero carbon emissions complex. These investments will decarbonize around 20 percent of Dow's global ethylene capacity while growing its PE resin supply by about 15 percent.

Chairman and CEO Jim Fitterling addressed Dow's 2022 prospects in a Jan. 27 news release.

"We expect continued demand strength across our end markets, supported by growing industrial production and sustained consumer spending," he said.

"We are working hard to normalize operating rates, inventory and service levels following a year of supply constraints and Covid-related logistics challenges," Fitterling added. "While the global economy continues to be impacted by supply chain pressures, these logistics constraints are expected to ease throughout the year to fulfill elevated order backlogs and pent-up customer demand."

Dow employs almost 36,000 worldwide. The firm ranks as one of the world's largest producers of PE and other specialty plastics and chemicals.